Which of the Following Represents the Most Contractionary Fiscal Policy

question 169

Multiple Choice

Which of the following represents the most contractionary fiscal policy?

• A)a $30 billion tax cut
• B)a $30 billion increase in government spending
• C)a $30 billion tax increase
• D)a $30 billion decrease in government spending.

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Definitions:

Noncurrent Liability

Long-term financial obligations listed on a company’s balance sheet that are not due within the next 12 months.

Long-Term Obligation

A liability or debt expected to be paid or settled over a period longer than one fiscal year.

Operating Flexibility

The degree to which a company can adjust its operations and costs in response to changes in the business environment.

Manufacturing Facilities

Physical locations where products are produced or manufactured, including plants and factories.