When Prices Increase, the Real Interest Rate

question 47

Multiple Choice

When prices increase, the real interest rate

• A) will increase and total planned spending on goods and services will increase.
• B) will increase and total planned spending on goods and services will decrease.
• C) will decrease and total planned spending on goods and services will decrease.
• D) will not be affected.

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Definitions:

Adjusting Entries

Journal entries made in accounting to update the records for expenses and revenues that have accrued but are not yet recorded.

Daily Wages

The amount of money that a worker earns for one day of labor.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset.

Office Supplies

Items and equipment regularly used in offices by businesses and other organizations, including paper, pens, and stationery.