When Congress Reduces Spending in Order to Balance the Government's

question 15

Multiple Choice

When Congress reduces spending in order to balance the government's budget, it needs to consider

• A) both the short-run effects on aggregate demand and aggregate supply, and the long-run effects on saving and growth.
• B) only the short-run effects on aggregate demand and aggregate supply.
• C) only the long-run effects on saving and growth.
• D) only the long-run effects on aggregate demand and aggregate supply.

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Definitions:

Transaction Motive

Refers to the need to hold cash for the purpose of conducting daily business transactions and operations.

Lockbox System

A service provided by banks to process payments by collecting and depositing checks into the company's account quickly.

NPV

Net Present Value (NPV) is a method used in capital budgeting to determine the value of an investment by calculating the present value of expected future cash flows using a specific discount rate.

Cash Concentration Accounts

Bank accounts used by companies to concentrate cash from multiple accounts into one for efficient management and utilization.