The Principle Underlying Fiscal Policy States That When Unemployment Is

question 32

Multiple Choice

The principle underlying fiscal policy states that when unemployment is rising and the economy is going into a recession, fiscal policy should:

• A) stimulate economic activity by decreasing taxes.
• B) curb economic activity by reducing government spending.
• C) let the forces of supply and demand operate on their own.
• D) employ a tight-money policy.
• E) reduce the rate of growth in the amount of money in circulation.

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Definitions:

Rent Receivable

An account in the balance sheet that represents the amount of rental payments owed to a property owner but not yet received.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.

Interest Payable

A liability account on a company's balance sheet representing the amount of interest expense that has been incurred but not yet paid.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period for a more accurate financial report.