Suppose There Is a Fiscal Expansion and the Central Bank

question 83

Multiple Choice

Suppose there is a fiscal expansion and the central bank controls the interest rate. Which of the following is a complete list of the variables that must increase as a result of the fiscal expansion?

• A) Consumption and output.
• B) Consumption, output and the interest rate.
• C) Consumption, output and investment.
• D) Consumption and investment.
• E) Consumption.

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Definitions:

Accrual

Involves recording revenues and expenses when they are incurred, regardless of when cash transactions occur.

Disclosure

The act of making new or important information known, especially facts that may influence a decision or affect the perception of a situation.

Debt-Paying Ability

A measure of a company's financial capacity to meet its long-term obligations, indicating its financial stability and risk level.

Quick Ratio

A financial metric indicating a company's ability to meet short-term obligations with its most liquid assets, providing insight into financial health.