Suppose That Over the Past Year,the Real Interest Rate Was

question 110

Multiple Choice

Suppose that over the past year,the real interest rate was 6 percent and the inflation rate was 4 percent.It follows that

• A)the dollar value of savings increased at 6 percent,and the purchasing power of savings increased at 2 percent.
• B)the dollar value of savings increased at 6 percent,and the purchasing power of savings increased at 10 percent.
• C)the dollar value of savings increased at 10 percent,and the purchasing power of savings increased at 2 percent.
• D)the dollar value of savings increased at 10 percent,and the purchasing power of savings increased at 6 percent.

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Definitions:

Sales Tax Payable

Sales tax payable is a liability account that records the amount of sales tax collected by a company from customers, which is due to be paid to the governmental tax authority.

Liability Account

An account on the balance sheet representing an obligation to pay money or deliver goods or services to another entity in the future.

Merchandise Return

A transaction where customers return previously purchased merchandise to the seller for a refund, credit, or exchange.

Asset Account

An account that records the value of assets owned by a person or organization.