Proponents of Spending on Infrastructure as a Means to Stimulate

question 13

Multiple Choice

Proponents of spending on infrastructure as a means to stimulate the economy note that the multiplier effect for ________ is estimated to be larger than the multiplier effect for ________,and would therefore have a greater impact on expanding GDP.

• A) increases in government spending; tax cuts
• B) tax increases; increases in government spending
• C) decreases in government spending; a balanced budget
• D) a balanced budget; tax increases

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, or obsolescence.

Accrued Revenues

Revenues earned in an accounting period that have not yet been received in cash or recorded at the statement date.

Unearned Rent

Income received for rent before the rental period has occurred, classified as a liability until the services (rental period) are performed.

Accrued Salaries

Salaries that have been earned by employees but have not yet been paid by the employer, recognized as a liability on the balance sheet.