Which of the Following Is an Example of a Contractionary

question 123

Multiple Choice

Which of the following is an example of a contractionary monetary policy?  

• A) Transfer payments to poor families are reduced. 
• B) The Bank of Canada buys government securities in the open market. 
• C) The bank rate is raised. 
• D) Government spending is reduced.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out.

Mismatching Problems

Issues that arise when expenses are recognized in a different period than the revenues they help to generate, potentially distorting financial statements.

Accrual Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Cash-Basis Accounting

An accounting method where revenues and expenses are recorded when cash is received or paid, rather than when they are earned or incurred.