Figure 14.3 -How Does a Decrease in Government Spending Affect the Aggregate

question 62

Multiple Choice

Figure 14.3
-How does a decrease in government spending affect the aggregate expenditure line in Figure 14.3?

• A) It shifts the aggregate expenditure line upward.
• B) It shifts the aggregate expenditure line downward.
• C) It increases the slope of the aggregate expenditure line.
• D) It decreases the slope of the aggregate expenditure line.

Analyze the impact of intercompany transactions on consolidated financial statements.

Apply the cost method and the equity method for investments in financial accounting.

Compute the adjustments necessary for consolidating financial statements including the elimination of intercompany sales and unrealized profits.

Understand the treatment of common shares and retained earnings in a consolidation context.

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Definitions:

Agency Agreement

A legal contract in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions or other matters.

Terminate

To bring to an end or to conclude something such as an agreement, employment, or process.

Principal Duty

The main or most important obligation that a party has under a contract or agreement.

Reimburse

To pay back someone for expenses they have incurred.