Suppose the Government's Budget Deficit Falls from One Year to the Next,but

question 106

Multiple Choice

Suppose the government's budget deficit falls from one year to the next,but there has been no change in the government's fiscal policy.The change in the budget deficit can be explained by

• A)a rising real interest rate.
• B)a change in the stance of fiscal policy.
• C)a rising real GDP.
• D)a rise in the cyclically adjusted deficit.
• E)a rise in the primary budget deficit.

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Definitions:

Interest Coverage Ratio

A financial metric used to determine how easily a company can pay interest on outstanding debt with its earnings before interest and taxes.

Operating Profit Inflows

Money coming into a business from its daily operational activities, reflecting the core earnings from its operations.

Required Interest Payments

The amount of interest an entity is obligated to pay on its borrowings for a specified period.

Operating and Cash Conversion Cycles

Measures of a company's efficiency in managing its operational processes and converting its investments in inventory into cash flows from sales.