If the Federal Government Wanted to Counteract the Effects of a Recession

question 292

Multiple Choice

If the federal government wanted to counteract the effects of a recession, it could

• A)increase tax rates.
• B)increase taxes by a fixed amount.
• C)increase government purchases.
• D)decrease defense spending.
• E)reduce the money supply.

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Definitions:

Business Entity Principle

The accounting concept that separates the transactions of a business from those of its owners or other businesses.

Operating

Pertaining to the core business functions and activities of an organization that contribute to the production of goods or services.

General Principles

Broad and fundamental guidelines or rules that form the basis for a field of study or profession.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction, notably in the United States.