Which of the Following Is True of Government Purchases

question 65

Multiple Choice

Which of the following is true of government purchases?

• A)They are positively related to current income.
• B)They are negatively related to current income.
• C)They are directly related to taxes.
• D)They are decided by public officials.
• E)They depend on the market rate of interest.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized when cash is received or paid, not when incurred.

Operations

The day-to-day activities required for the running of a business or an organization, focusing on the production and delivery of goods and services.

Noncash Investing

Transactions that involve the acquisition or disposal of non-monetary assets through means other than direct cash payment.

Financing Activity

Operations related to the company's financing, including issuing shares, bonds, and managing equity, aimed at raising, refunding, or repaying the company's capital.