People Who Want the Federal Government to Restrict Spending or Raise

question 155

Multiple Choice

People who want the federal government to restrict spending or raise taxes during booms and use surpluses from the booms to offset deficits during recessions would agree with the _____ approach to federal finance.

• A) annually balanced budget
• B) cyclically balanced budget
• C) functional finance
• D) trade balanced budget

Understand the basic concepts and terminologies related to budgeting in a manufacturing and service business context.

Identify and calculate different types of variances (spending, activity, revenue) and their implications for business decision-making.

Analyze flexible budgets and understand how changes in activity levels affect budgeted income.

Detail the process of creating planning and flexible budgets and the importance of accuracy in budgeted figures.

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Definitions:

Loanable Funds

The funds available for borrowing in the financial markets, involving the lending and borrowing between savers and borrowers, which determines the equilibrium interest rate.

Domestic Investment

The total amount of resources invested in the production of goods and services within a country’s borders.

Net Capital Outflow

The purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.

Net Capital Outflow

The difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners; it can be positive (net outflow) or negative (net inflow).