The Only Government Policy That Has a DIRECT Effect on the Aggregate

question 287

Multiple Choice

The only government policy that has a DIRECT effect on the aggregate demand curve is:

• A) changing the quantity of money.
• B) raising or lowering the tax rate.
• C) changing the level of government purchases of final goods and services.
• D) changing the level of government transfers.

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Definitions:

Reversing Entries

Entries made in accounting to reverse or cancel out adjusting entries made at the end of a reporting period, often used to simplify recordkeeping.

External Transactions

Financial transactions between a business and an outside party, which can include buying from or selling to another company.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends, but rather kept by the company for reinvestment in its operations or to pay debt.

Closing Process

The accounting procedures used to close out business accounts at the end of an accounting period.