Use of Activist Fiscal and Monetary Policy Can Bring Rapid

question 176

Multiple Choice

Use of activist fiscal and monetary policy can bring rapid growth, as was the case in the United States before the 1972 election. One consequence of an activist policy is:

• A) use of macroeconomic policy that stabilizes the economy.
• B) a political business cycle caused by the use of macroeconomic policy to serve political ends.
• C) countercyclical macroeconomic policy designed to help the economy.
• D) crowding out as decreases in government spending push out the private business spending.

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Definitions:

Indirect Method

A way of reporting cash flows from operating activities on the cash flow statement where net income is adjusted for non-cash transactions, deferrals, and accruals.

Statement of Cash Flows

A financial report detailing how adjustments in balance sheet items and income influence cash and cash equivalents, segmented into operating, investing, and financing sections.

Indirect Method

A cash flow statement format that starts with net income and adjusts for transactions affecting operational cash flows, without directly listing them.

Operating Activities

Activities directly related to the core business operations, including cash flows from sales, services, and the costs of doing business, reflected on a company's cash flow statement.