Which of the Following Would Be Most Likely to Lead

question 30

Multiple Choice

Which of the following would be most likely to lead to a higher level of interest rates in the economy?

• A) Households start saving a larger percentage of their income.
• B) Corporations step up their expansion plans and thus increase their demand for capital.
• C) The level of inflation begins to decline.
• D) The economy moves from a boom to a recession.
• E) The Federal Reserve decides to try to stimulate the economy.

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Definitions:

Revenue Recognition Principle

An accounting principle that outlines the specific conditions under which revenue is recognized.

Unearned Rent Revenue

Income received by a company for rent that has not yet been earned because the service period has not occurred.

Unearned Service Revenue

Income received by a company for services yet to be performed; considered a liability until the service is delivered.