Changes in Government Purchases Affect Planned Aggregate Expenditure

question 135

Multiple Choice

Changes in government purchases affect planned aggregate expenditure

• A) only when there is an expansionary gap.
• B) autonomously.
• C) directly.
• D) by changing disposable income and,consequently,consumption.
• E) by changing taxes and transfer payments.

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Definitions:

Master Budget

A document that integrates all the estimates from the different departments to establish guidelines and benchmarks for the whole organization.

Favorable Variance

A financial term indicating that actual spending was less than budgeted amounts, or revenue was higher than expected.

Fixed Overhead

Refers to the regular, static expenses of operating a business that are not affected by changes in production volume or sales.