To Close an Inflationary Gap with Fiscal Policy, the Government

question 118

Multiple Choice

To close an inflationary gap with fiscal policy, the government could:

• A) reduce budget allocations to interstate highway maintenance.
• B) increase federal subsidies to state universities.
• C) lower the corporate income tax rate.
• D) raise the average amount awarded for a disability pension.

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Definitions:

Goodwill Impairment

A reduction in the book value of goodwill, which occurs when the carrying amount of goodwill exceeds its fair value, indicating that the asset is not as valuable as previously thought.

Reporting Units

Segments or components of a business for which discrete financial information is available and reviewed by the operating segment's management.

Equity Method

An accounting technique used by a company to record its investment in another company, where the investment's value is adjusted in accordance with the investee's performance.

Partial Equity Method

An accounting method used for investments, where the investor recognizes its share of the investee's earnings, but adjustments are less comprehensive than under the full equity method.