Consider a Model with Demand-Determined Output and a Constant Price

question 71

Multiple Choice

Consider a model with demand-determined output and a constant price level.A decrease in the net tax rate causes ________ in autonomous spending and a ________ in the simple multiplier.

• A)a rise; rise
• B)a rise; fall
• C)no change; rise
• D)no change; fall
• E)a fall; fall

---

Definitions:

Prepaid Insurance

Refers to payments made in advance for insurance coverage, recognized as an asset on the balance sheet until the coverage period lapses.

Prepaid Expenses

Expenses paid in advance by a company for goods or services to be received in the future, reported as current assets on the balance sheet.

Adjusting Entry

Journal entries made at the end of an accounting period to update account balances before financial statements are prepared.

Expense Accounts

Accounts used to record expenses in the general ledger, capturing costs associated with operating the business.