If Congress Votes to Increase Government Purchases and at the Same

question 22

Multiple Choice

If Congress votes to increase government purchases and at the same time decrease personal income taxes, they

• A) have decided to balance the federal budget.
• B) have voted for the proper policy to counteract a recession.
• C) have voted for the proper policy to counteract inflation and an economic boom.
• D) are trying to achieve a federal budget surplus.

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased by consumers.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.

Work In Process

Inventory items that are in the process of being manufactured but are not yet completed.

Differential Costs

The difference in total costs that will arise from selecting one alternative over another in decision-making situations.