Which of the Following Best Illustrates the Use of Discretionary

question 78

Multiple Choice

Which of the following best illustrates the use of discretionary fiscal policy?

• A)Congress providing $1 billion in relief aid for hurricane victims
• B)Congress appropriating $400 million to help the needy and the appropriation being financed by a tax on wealth
• C)Income tax receipts being smaller because of a decline in real GDP during a recession
• D)The Federal Reserve tightening credit when it receives news of accelerating inflation
• E)Congress passing a bill authorizing $2 billion in additional spending when it receives news of a deepening recession

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Definitions:

Year-end Balance Sheets

Financial statements detailing a company's assets, liabilities, and equity at the end of a fiscal year.

Retained Earnings

Profits that a company retains rather than distributes to its shareholders as dividends, often used for reinvestment.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value over time.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.