If Government Purchases Increases by $1 Million While Net Taxes

question 89

Multiple Choice

If government purchases increases by $1 million while net taxes are unchanged, then:

• A) public saving increases.
• B) public saving decreases.
• C) public saving does not change.
• D) private saving increases.

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Definitions:

Note Payable

A financial obligation in the form of a written promissory note that specifies the principal amount, interest rate, and due date.

Net Income

A company's final earnings following the deduction of all expenses and taxes from its revenues.

Net Cash Flow

The difference between cash inflows and outflows in a given period, indicating the liquidity position of a business.

Depreciation Expense

The amount of the cost of a tangible asset that is allocated as an expense over its useful life.