An Expansionary Fiscal Policy

question 102

Multiple Choice

An expansionary fiscal policy
I. includes an increase in government spending.
II. includes tax cuts.
III. increases a government budget deficit or reduces a government budget surplus.

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

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Definitions:

Net Operating Income

Earnings resulting from the standard operations of a business, without considering taxes and interest expenses.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Advertising Spending

The total amount of money that is allocated towards advertising products or services in various media outlets.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the degree of risk associated with falling sales.