In Any Decision About Stimulating the Economy with a Fiscal

question 102

Multiple Choice

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases) ,the government must weigh the short-run benefits of ________ against the long-run costs of ________.

• A)a higher price level; unemployment
• B)increased potential output; a higher price level
• C)a higher price level; lower real GDP
• D)increased real GDP; higher economic growth
• E)increased economic activity; lower economic growth

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Definitions:

Perpetual Inventory Method

An inventory accounting system that records the sale or purchase of inventory in real-time through the use of computerized point-of-sale systems and enterprise asset management software.

General Journal Entries

General journal entries are the initial records of financial transactions in the double-entry accounting system, entered in the general journal.

Terms 2/10, N/30

A set of credit terms that offer a discount of 2% if payment is made within 10 days; otherwise, the full invoice amount is due within 30 days.

Perpetual Inventory Method

An accounting practice where the inventory records are updated immediately after every addition or subtraction, providing a continuously accurate inventory level.