During the Johnson Administration, the U

question 32

Multiple Choice

During the Johnson administration, the U.S.economy was headed toward an inflationary gap.In 1967 President Johnson proposed a temporary 10% increase in personal income taxes.If the Fed wanted to mitigate the effects of this contractionary policy, what could it do?

• A)conduct an open market purchase
• B)conduct an open market sale
• C)raise the reserve requirement ratio
• D)raise the discount rate

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Definitions:

Ending Equity

The value of an owner’s interest in a company at the end of an accounting period, determined by subtracting liabilities from assets.

Payroll Accrual

An accounting method that records payroll expenses incurred but not yet paid out to employees, ensuring expenses are recognized in the period they are incurred.

Accounting Period

The span of time covered by financial statements, often a quarter or year, reflecting the company's financial performance and position.

Accrual Entry

An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.