The Argument That a Balanced Budget Amendment Would Be "Pro-Cyclical

question 2

Multiple Choice

The argument that a Balanced Budget Amendment would be "pro-cyclical" means that it would cause

• A)bad times to be better than they would otherwise be.
• B)good times to be worse than they would otherwise be.
• C)bad times to be worse than they would otherwise be.
• D)bad times to be better and good times to be worse than they would otherwise be.

---

Definitions:

Contribution Margin Income Statement

An income statement format that separates variable costs from fixed costs, focusing on contribution margin.

External Reporting

The provision of financial and non-financial information to external stakeholders, such as investors, creditors, and regulatory agencies, usually formal and standardized.

Fixed Manufacturing Costs

Expenses that do not change with the level of production, including things like rent for factory space and salaries of permanent staff.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.