Business Cycles Will Occur If Either of the Two Theories

question 118

Multiple Choice

Business cycles will occur if either of the two theories below characterizes the behavior of the economy:

• A)the classical or the Keynesian theories of aggregate demand.
• B)the classical or the real balance theory.
• C)deflation impotence or rigid nominal wages.
• D)A and C.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, which estimates uncollectible accounts receivable and creates a provision for them.

Accounts Receivable

Financial dues from customers to an organization for products or services that have been dispensed but not reimbursed.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's receivables that may not be collectible.

Bad Debts Expense

This is an expense reported on the income statement, reflecting the cost of credit sales that a company does not expect to collect.