In the Basic Keynesian Model,to Close an Expansionary Gap of $10

question 202

Multiple Choice

In the basic Keynesian model,to close an expansionary gap of $10 billion,taxes must be

• A) increased by $10 billion.
• B) decreased by $10 billion.
• C) increased by more than $10 billion.
• D) increased by less than $10 billion.
• E) decreased by less than $10 billion.

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Definitions:

Acquisition Differential

The difference between the purchase price of an acquired company and the book value of its assets and liabilities.

Push Down Accounting

An accounting method in which the financial statements of a subsidiary are adjusted to reflect the parent company's basis of assets, liabilities, and any goodwill created in the acquisition.

Negative Acquisition Differential

occurs when the sum of the fair values of identifiable net assets exceeds the cost of acquisition, leading to an immediate gain in the acquirer's financial statement.

Negative Goodwill

A financial situation where the purchase price of a company is less than the fair market value of its assets minus liabilities.