Assume That a Government Has a Balanced Budget When the Economy

question 20

Multiple Choice

Assume that a government has a balanced budget when the economy is at full employment. If the economy then enters a recession, with no change in tax or spending laws, then the budget of the government is most likely to:

• A) remain balanced.
• B) be in deficit.
• C) be in surplus.
• D) be in either deficit or surplus, depending on the severity of the recession.

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Definitions:

Labor Efficiency Variance

A measure in managerial accounting that compares the actual hours worked to the standard hours planned for a process, indicating efficiency in labor usage.

Labor Rate Variance

The difference between the actual labor costs incurred and the expected (or standard) labor costs for the production achieved.

May

Not a term that needs defining within the given context.

Labor Efficiency Variance

The variance between the number of hours actually worked and the expected standard hours needed to achieve a specific output level, calculated using the standard labor rate.