What Are the Two Tools of Fiscal Policy That Governments

question 21

Multiple Choice

What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?

• A) government spending and taxation
• B) government spending and technology improvements
• C) taxation and controlling imports
• D) taxation and controlling exports

---

Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual quantity of units produced, multiplied by the fixed overhead rate per unit.

Unfavorable

A term used to describe variances or differences that negatively impact profitability or efficiency, often indicating higher costs or lower revenue than expected.

Favorable

A term used in accounting and finance to describe situations where actual costs are less than budgeted or expected costs, or revenue is higher than anticipated.

Manufacturing Overhead Volume Variance

The difference between the budgeted volume of manufacturing overhead and the actual volume incurred, used for budgeting and cost control.