Whether a Given Type of Information Is Relevant or Irrelevant

question 74

Multiple Choice

Whether a given type of information is relevant or irrelevant depends on:

• A) Its accuracy
• B) Its objectivity
• C) Its relation to the decision to be made
• D) Whether it is cash-basis or accrual-basis

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Definitions:

Multiplier Effect

The relative change in net income resulting from an addition or reduction in expenditure.

Crowding out

A situation in economics where increased government spending displaces private sector spending, either through higher taxes, higher interest rates, or borrowing.

Government Expenditures

The spending by the government sector on goods and services, including public services and public investment.

Multiplier

An economic factor that quantifies the effect of a change in fiscal or monetary policy on the overall economy, such as how an increase in government spending can lead to a larger increase in national income.