Which of the Following Statements Concerning Stabilization Policy Is Correct

question 16

Multiple Choice

Which of the following statements concerning stabilization policy is correct?

• A)Increasing government spending during an economic boom would be an example of a stabilization policy.
• B)Increasing taxes during a recession would be an example of a stabilization policy.
• C)New Keynesian economists are skeptical of the value of stabilization policies.
• D)Increasing the money supply during a recession is an example of a stabilization policy.

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Definitions:

Bad Debts Expense

Bad debts expense is the cost to a business of accounts receivable that are not collected because customers are unable to pay.

Allowance for Doubtful Accounts

An accounting provision made for accounts receivable that may not be collectible.

Balance Sheet Approach

A method of estimating allowances and provisions based on the balances of assets and liabilities, rather than focusing primarily on income statement items.

Income Statement Approach

A method of accounting or financial analysis focusing on revenues, expenses, and net income to evaluate a company's performance over a period.