In a Closed Economy, If Y, C, and T Remained

question 141

Multiple Choice

In a closed economy, if Y, C, and T remained the same, a decrease in G would

• A)reduce private saving and public saving.
• B)increase private saving but not public saving.
• C)increase public saving but not private saving.
• D)increase neither private nor public saving.

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Definitions:

Retained Earnings

The cumulative amount of net income earned by a company that is retained and not distributed to shareholders as dividends.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Net Income

The remaining earnings of a corporation after deducting all operating costs and tax obligations from its revenue.

Dividends Declared

The action by a company's board of directors to distribute a specified amount of the company’s earnings to its shareholders.