Because of Automatic Fiscal Policy, When Real GDP Decreases

question 132

Multiple Choice

Because of automatic fiscal policy, when real GDP decreases

• A) government expenditures increase and tax revenues decrease.
• B) the economy will automatically go to full employment.
• C) government expenditures decrease and tax revenues increase.
• D) government expenditures equal tax revenues.

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Definitions:

Net Income

The end profit of a company once every expense, tax, and cost has been taken out of its total income.

Business Entity Assumption

A fundamental accounting principle that treats the transactions of a business separately from those of its owners or other businesses.

Accounting Information

Data generated from the accounting processes of a company, including financial statements and records that inform stakeholders about its financial performance.

Business Entities

Legal structures that are allowed to engage in business, such as corporations, partnerships, and sole proprietorships.