Which of the Following Are Possible Consequences When the Government

question 5

Multiple Choice

Which of the following are possible consequences when the government reduces government purchases to address an inflationary gap?
I. increase in the price of bonds
II. increase in net exports
III. decrease in the federal budget deficit (or increase the surplus)
IV. decrease in the exchange rate

• A) I, II, III, and IV
• B) I and III only
• C) I, III, and IV only
• D) II, III, and IV only

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Definitions:

International Standards

These are agreements set by international organizations that dictate certain specifications, guidelines, or characteristics to ensure products, services, and systems are safe, reliable, and interchangeable worldwide.

IFRS

A collection of accounting principles formulated by the International Accounting Standards Board, known as International Financial Reporting Standards, that aid in the global creation of financial reports.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards used in financial reporting within the United States.

Proprietorships

A business structure where a single individual owns and runs the business, bearing unlimited liability for its debts and obligations.