Discretionary Fiscal Policy May Fail to Stabilize the Economy or May

question 64

Multiple Choice

Discretionary fiscal policy may fail to stabilize the economy or may even make the economy less stable because of:

• A) its ineffectiveness.
• B) government waste.
• C) lags in deciding on and implementing a policy change.
• D) the business cycle.

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Definitions:

Adjusting Entries

Entries recorded at the conclusion of an accounting period to adjust the account balances prior to the creation of financial statements.

Revenue And Expense

Key components of an income statement, with revenue representing income earned and expense depicting costs incurred in generating that income.

Correcting Entries

Journal entries made in accounting to correct previously made errors or adjustments in the financial statements.

Accrual Basis

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.