If the Government Finances an Increase in Government Purchases with an Increase

question 14

Multiple Choice

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

• A)an increase in the exchange rate
• B)a decrease in the interest rate
• C)a decrease in aggregate demand
• D)an increase in net exports

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Definitions:

Accruals

Accounting adjustments for revenues that have been earned or expenses that have been incurred but not yet recorded through daily entries.

Deferrals

Expenses or revenues that have been recorded but not yet realized. This can involve money that has been received or paid but not yet earned or incurred.

Adjusting Entries

Documentation in accounting completed at the end of a financial period to rightly assign incomes and expenses to the appropriate time.

Office Supplies

Items used in offices for daily operations, such as paper, pens, and staplers.