The Figure Given Below Shows the Demand [D and D']

question 40

Multiple Choice

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-Which of the following factors led to the housing bubble in the U.S. in 2006?

• A)Increased amount of lending to subprime borrowers
• B)Decreased money supply by Federal Reserve
• C)Future expectation about downward movement of prices of the houses
• D)Federal Reserve raised the market rate of interest
• E)Increase in the supply of houses

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Definitions:

Net Method

An accounting technique where discounts for prompt payment are calculated and recorded immediately, reducing the purchase cost of inventory.

Allowance for Sales Discounts

An account used in bookkeeping to estimate the reduction in revenue due to sales discounts that customers are expected to take advantage of.

Accounts Receivable

Debts owed by customers to a business for items or services that have been furnished but not compensated.

Sales Discounts

A reduction in the price of goods sold, offered by the seller to the buyer, often to encourage prompt payment.