When the Government Closes an Expansionary Gap with a Change

question 148

Multiple Choice

When the government closes an expansionary gap with a change in government spending,the _____ in government spending leads to _____.

• A)decrease;a decrease in both real GDP and the price level
• B)decrease;a decrease in real GDP and an increase in the price level
• C)decrease;an increase in both real GDP and the price level
• D)decrease;an increase in real GDP and a decrease in the price level
• E)increase;a decrease in both real GDP and the price level

---

Definitions:

Subchapter S

A section of the Internal Revenue Code allowing corporations with 100 shareholders or less to be taxed as a partnership, avoiding double taxation.

Internal Revenue Code

The comprehensive set of tax laws and regulations in the United States governing federal tax obligations.

Tax Status

Refers to the classification of an entity or individual for tax purposes, based on criteria like income, employment, or ownership structure, affecting tax responsibilities.

Declaring Dividends

The action by a company's board of directors to distribute profits to shareholders in proportion to the amount of shares they own.