The Two Major Policy Tools Available for Controlling Economic Activity

question 8

Multiple Choice

The two major policy tools available for controlling economic activity are ______.

• A) tax and spending policies
• B) monetary and fiscal policies
• C) interest rate and credit policies
• D) interest rate and taxing policies

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Definitions:

Tax Laws

Regulations imposed by governmental agencies in relation to the calculation and payment of taxes by individuals and organizations.

Deferred Tax Liability

A tax obligation that arises when there are temporary differences between the book value and the tax value of assets and liabilities.

Deferred Tax Asset

A Deferred Tax Asset arises when a company pays more tax to the government than it owes in its financial statements, which can be used to reduce tax liability in future periods.

Adjusted

Refers to the modification of financial statements to provide a more accurate picture by removing the effects of non-recurring transactions or events.