It Is True That

question 128

Multiple Choice

It is true that:

• A) equal increases in government spending and taxes do not change the equilibrium GDP.
• B) equal increases in government spending and taxes reduce the equilibrium GDP.
• C) equal increases in government spending and taxes increase the equilibrium GDP.
• D) taxes have a stronger effect upon equilibrium GDP than do government purchases.

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Definitions:

Debit Memorandum

A document issued by a buyer to a seller notifying of a debit made in the seller's account, often used in adjustments for returned goods or discrepancies.

Note Receivable

A written promise that one party will pay another a specific sum of money at a certain time or on demand.

Bank Collection

The process by which a bank processes items for payment, like checks or promissory notes, on behalf of its clients.

Adjusting Journal Entries

Entries made in accounting records to update balances at the end of an accounting period before financial statements are prepared.