If Government Tax Revenues Change Automatically and in a Countercyclical

question 160

Multiple Choice

If government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this would be called a(n) :

• A)discretionary fiscal policy.
• B)expansionary fiscal policy.
• C)political business cycle.
• D)nondiscretionary fiscal policy.

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Definitions:

Premium

The amount paid for an insurance policy or an amount paid over the face value of bonds.

Debt-To-Equity Ratio

A financial benchmark that shows the ratio between debt and shareholders' equity in asset financing.

Prepaying Bonds

The action of repaying the principal of a bond before its maturity date, often as a way to manage debt or save on interest costs.

Outstanding Bonds

Bonds issued by an entity that are currently not redeemed and are in the hands of investors.