If Income Is $40 Billion, the Price Level Is 10

question 221

Multiple Choice

If income is $40 billion, the price level is 10, and the stock of money is $20 billion, what is the velocity of money?

• A) 0.8
• B) 5
• C) 8
• D) 20

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Definitions:

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.

Accounts Receivable

Funds due to a company for goods or services delivered or used but not yet paid for by customers.

Bad Debt Expense

An expense account that represents accounts receivables that a company does not expect to collect due to customers' inability to fulfill payment obligations.

Uncollectible Accounts Expense

Expenses related to uncollectible amounts from credit sales.