The Use of Discretionary Fiscal Policy to End a Recession

question 216

Multiple Choice

The use of discretionary fiscal policy to end a recession is limited because

• A) the legislative process is slow.
• B) potential GDP changes too rapidly.
• C) the real-world multiplier is too small to have an impact on real GDP.
• D) in the real world, taxes are not induced.

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Definitions:

Withdrawals

Money or assets taken out of a business by its owners for personal use.

Worksheet Income Statement

A simplified version of an income statement prepared within an accounting worksheet to calculate net income or loss.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, reflecting its nature in accounting.

Financial Statement

Reports that provide information about a company's financial condition, performance, and cash flows, including balance sheets, income statements, and more.