Use the Following to Answer Question

question 377

Multiple Choice

Use the following to answer question :
Figure: The Market for Loanable Funds with Government Borrowing
-(Figure: The Market for Loanable Funds with Government Borrowing) Look at the figure The Market for Loanable Funds with Government Borrowing. After an increase in government borrowing, the new equilibrium interest rate will rise from 6% to _____ and the amount of private savings will _____.

• A)10%; stay the same
• B)8%; rise
• C)8%; fall
• D)10%; be indeterminate

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Definitions:

Income Recognition

The process by which revenue is accounted for and recorded on the financial statements in the period it is earned and can be reliably measured.

Equity Method

The equity method is an accounting technique used for recording investments in associate companies, recognizing the investor’s share of profits or losses which is proportional to their investment.

Investor's Financial Statements

Financial reports prepared to give shareholders and potential investors insight into a company's financial status and operations.

IAS 28

An International Accounting Standard governing the accounting for investments in associates and joint ventures.