If You Were Told That the Government Had an Actual

question 122

Multiple Choice

If you were told that the government had an actual budget deficit of $50 billion, then you would

• A) know that fiscal policy was expansionary.
• B) know that fiscal policy was contractionary.
• C) know that fiscal policy was producing a cyclical deficit.
• D) not be able to determine the direction of fiscal policy from the information given.

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Definitions:

Accounting Cycle

The series of steps followed by an organization to record financial transactions and prepare financial statements over a specific accounting period.

Depreciation

Systematically dividing the cost of a tangible asset across its life of utility.

Financial Statements

Papers detailing a business's financial status, comprising the income statement, balance sheet, and statement of cash flows.

Net Income

The company's resulting profit when all deductions, including expenses and taxes, are made from the total income.