If Businesses React to a Pessimistic Outlook and Decrease Spending,the

question 91

Multiple Choice

If businesses react to a pessimistic outlook and decrease spending,the Fed can counteract this by:

• A) decreasing money supply growth to spur the economy out of the recession.
• B) increasing money supply growth,lowering real interest rates,and encouraging borrowing.
• C) increasing government expenditures to spur the economy out of the recession.
• D) decreasing corporate taxes to encourage firms to increase their spending.

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Definitions:

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period.

Adjusting Entries

These are journal entries made in an accounting period to allocate income and expenditures to the period in which they actually occurred.

Journalize Transactions

The process of recording financial transactions in the journal as part of the accounting cycle.

Analyze Transactions

The process of examining financial transactions to understand their nature, how they affect the accounts, and how they should be recorded in the accounting system.