Which of the Following Statements Is Incorrect

question 169

Multiple Choice

Which of the following statements is incorrect?

• A)Given the economy's MPS, a $15 billion reduction in government spending will reduce the equilibrium GDP by more than would a $15 billion increase in taxes.
• B)Other things unchanged, a tax reduction of $10 billion will increase the equilibrium GDP by $25 billion when the MPS is 0.4.
• C)If the MPC is 0.8 and GDP has declined by $40 billion, this was caused by a decline in aggregate expenditures of $8 billion.
• D)A government surplus is anti-inflationary; a government deficit is expansionary.

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Definitions:

Estimated Returns Inventory

A current asset account for the estimated amount of merchandise that will be returned by customers.

Customer Refunds Payable

Liabilities owed to customers for products or services that were sold but later returned or found unacceptable.

Perpetual Inventory

An inventory tracking system that records the sale or purchase of inventory immediately through the use of computerized systems.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, carried over from the end of the previous period.