Which of the Following Is an Example of Discretionary Fiscal

question 40

Multiple Choice

Which of the following is an example of discretionary fiscal policy?

• A)an increase in employment insurance payments during a recession
• B)an increase in income tax receipts with rising income during an expansion
• C)tax cuts passed by the government to combat a recession
• D)a decrease in employment insurance payments during an expansion or boom
• E)the replacement of the sewer system after a major sewerline break

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Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be usable by an organization.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment valuation and project evaluation.

Annual Net Cash Inflows

The total amount of cash received minus cash expenses over a year.

Net Present Value

The discrepancy in the present valuation of incoming and outgoing cash flows within a certain timeframe.