The Use of Fiscal Policy to Stabilize the Economy Is

question 248

Multiple Choice

The use of fiscal policy to stabilize the economy is limited because

• A)changes in government spending and tax rates have a small effect on aggregate demand.
• B)changes in government spending and tax rates have a small effect on interest rates.
• C)the legislative process can be slow,which means that it is difficult to make fiscal policy actions in a timely way.
• D)the Internal Revenue Service (IRS)resists changes in tax rates because of all the changes they would have to make to the tax code.

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Definitions:

Overapplied Overhead

Occurs when the overhead allocated to products or services exceeds the actual overhead costs incurred.

Australian Accounting Standards

The set of principles and requirements that guide financial reporting and accounting practices in Australia, ensuring consistency and transparency.

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Expensed

The process of recording costs as expenses in the income statement in the period in which they are incurred.