Without a Change in Discretionary Fiscal Policy, We Would Expect

question 18

Multiple Choice

Without a change in discretionary fiscal policy, we would expect that if the economy goes into recession, then the

• A)cyclically adjusted deficit and the actual deficit would both increase.
• B)cyclically adjusted deficit and the actual deficit would both decrease.
• C)cyclically adjusted deficit would stay the same while the actual deficit would increase.
• D)cyclically adjusted deficit would increase while the actual deficit would stay the same.

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Definitions:

Operating Income

Revenue from business operations after operating expenses and before interest and taxes.

Transfer Prices

Prices charged for the sale of goods or services between departments or subdivisions of the same company.

Variable Cost

Expenses that fluctuate in direct proportion to the production or sales volume, including the costs of raw materials and direct labor.

Outside Supplier

A company or entity that provides goods or services to another company but is not part of that company's corporate structure.