Which of the Following Would Most Likely Occur If the Federal

question 43

Multiple Choice

Which of the following would most likely occur if the federal government increased its spending and enlarged the size of the budget deficit during a period of full employment?

• A) The rate of inflation would decline.
• B) The rate of inflation would rise.
• C) A recession would develop.
• D) Interest rates would fall.

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Definitions:

Deposits

Funds placed into a bank account or towards the purchase of an asset, representing a liability for the bank or a commitment by the buyer.

Liability

A financial obligation or debt owed by a company to another entity, which must be settled in the future through the transfer of assets or services.

Petty Cash

Petty cash is a small amount of cash on hand used for paying expenses too small to merit writing a check or using a credit card.

Cash Payments

Transactions where money is paid out by a business or individual in exchange for goods or services.