If Government Increases the Size of Its Full-Employment Surplus, We

question 197

Multiple Choice

If government increases the size of its full-employment surplus, we can:

• A)assume that government is causing interest rates to rise.
• B)not determine government's impact on the economy without also knowing the status of the actual budget.
• C)assume that government is having a contractionary effect on the economy.
• D)assume that government is having an expansionary effect on the economy.

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Definitions:

Capital Account

An account on a nation's balance of payments that records all transactions involving the purchase or sale of assets, or in business, the account showing the net worth of a business entity.

Bonus

An extra payment given to employees as an incentive or reward beyond their regular compensation.

Admission Fee

A charge for entry, often used in the context of events, clubs, or institutions.

Capital Balance

The amount of money in a firm's capital account, reflecting the owner's initial investment plus retained earnings.