In Contrast to the Functional Finance View, Classical Sound Finance

question 27

Multiple Choice

In contrast to the functional finance view, Classical sound finance macroeconomics assumes that individuals:

• A)do not adjust their spending to account for future tax payments.
• B)adjust their spending to account for future tax payments.
• C)do not adjust their spending to account for future incomes.
• D)adjust their spending to account for future incomes.

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Definitions:

Journal Entry

A record in accounting that notes every transaction a business makes, providing a chronological log necessary for the financial statements.

Promissory Note

A written, legal agreement where one party promises to pay another a specific sum of money on a certain date or upon demand.

Accounts Receivable

Money owed to a business by its customers for goods or services provided on credit.

Paper Company

A business entity created, often in a tax haven, for the purpose of managing investment or conducting transactions without engaging in operational business activities.