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AICPA Exam CPA-Business Topic 1 Question 100 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 100
Topic #: 1
[All CPA-Business Questions]

Which of the following actions is the acknowledged preventive measure for a period of deflation?

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Suggested Answer: A

Choice 'a' is correct. As the cost of carrying inventory decreases, safety stock would tend to increase to reduce the risk of stock outs.

Choice 'b' is incorrect. As sales become more predictable (sales variability decreases), less (not more) safety stock would be needed because the risk of stock outs would have decreased.

Choice 'c' is incorrect. If the cost of stock outs decrease, safety stock would decrease.

Choice 'd' is incorrect. If lead-time decreases, safety stock would decrease.


by Kristeen at Sep 18, 2024, 07:39 PM

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Lai
1 months ago
I've got a better idea - how about we just print more money and call it a day? What could go wrong?
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Ashley
7 days ago
B) Increasing the money supply.
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Noe
9 days ago
A) Increasing interest rates.
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Celeste
1 months ago
Increasing interest rates during deflation? That's like trying to put out a fire with gasoline!
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Monroe
2 months ago
Wait, isn't decreasing the money supply the way to combat inflation? I'm so confused!
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Clorinda
19 days ago
B) Increasing the money supply.
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Irma
21 days ago
A) Increasing interest rates.
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Desmond
2 months ago
But wouldn't increasing interest rates discourage borrowing and spending, leading to deflation?
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Nan
2 months ago
I disagree, I believe the answer is B) Increasing the money supply.
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Beckie
2 months ago
Increasing the money supply? Sounds like the right move to me. I'll have to remember that one.
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Lai
23 days ago
No problem! It's important to understand the measures to prevent deflation.
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Raina
26 days ago
Oh, I see. Thanks for the clarification.
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Derrick
28 days ago
The correct action is increasing interest rates.
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Mi
1 months ago
Increasing the money supply is actually not the acknowledged preventive measure for deflation.
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Desmond
2 months ago
I think the answer is A) Increasing interest rates.
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Lizbeth
2 months ago
Hmm, I thought decreasing interest rates was the way to go during deflation. I hope I don't get this one wrong on the exam!
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