According to the Interest Rate Effect, a Decrease in the Price

question 204

Multiple Choice

According to the interest rate effect, a decrease in the price level will

• A) decrease the real value of money balances, which causes total planned real expenditures to increase.
• B) cause interest rates to fall, which generates an increase in borrowing, so that total planned real expenditures increase.
• C) lead to a decrease in net exports, which causes total planned real expenditures to decrease.
• D) increase the real value of money balances, which causes interest rates to increase, thereby reducing total planned expenditures.

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Definitions:

DSO

The average duration a company needs to collect payment post-sale is known as Days Sales Outstanding.

Seasonal Sales

Variations in sales volume that occur at specific times of the year due to factors like holidays or seasons.

Synchronization of Cash Flows

The strategic timing of income and expense cash flows to ensure liquidity and optimize financial performance.

Cash Management

The strategy for managing a company's or an individual's financial operations, such as collecting, investing, and managing cash and liquid assets.