Which Measure Is NOT an Example of Discretionary Fiscal Policy

question 129

Multiple Choice

Which measure is NOT an example of discretionary fiscal policy?

• A) The unemployment compensation program pays out more money as the unemployment rate rises.
• B) Tax rates are increased in the hope of slowing the rate of inflation.
• C) Tax increases are enacted to reduce the government deficit.
• D) Government spending is increased to reduce the problems caused by a recession.

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Definitions:

Gross Profit Method

An inventory estimation technique that calculates cost of goods sold and ending inventory based on gross profit margin.

Estimated Ending Inventory

A projection of the value of inventory on hand at the end of an accounting period, often calculated using inventory methods such as FIFO or LIFO.

Gross Profit Rate

The ratio of gross profit (sales minus cost of goods sold) to sales revenue, expressed as a percentage.

Balance Sheet

A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time.