Actual Federal Budgets Are Not an Accurate Measure of Discretionary

question 79

Multiple Choice

Actual federal budgets are not an accurate measure of discretionary fiscal policy because:

• A)it is difficult to measure government spending accurately.
• B)people cheat on their income taxes.
• C)budget deficits increase during expansions even without changes in fiscal policy.
• D)budget deficits increase during recessions even without changes in fiscal policy.
• E)earlier administrations may have contributed to current budget deficits.

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Definitions:

New Ventures

Refers to the initiation of new business activities or startup companies.

Capital Improvements

Expenditures relating to the upgrade, enhancement, or expansion of physical assets, increasing their useful life or value.

Expansion

Expansion refers to the phase of business growth and economic development where a company or economy sees an increase in scale, output, or market reach.

Negative NPV

A condition where the net present value of all cash flows associated with a project or investment is negative, indicating that it is not financially viable.