Assume That the Economy Is in a Recession and There

question 86

Multiple Choice

Assume that the economy is in a recession and there is a budget deficit. A strict balanced-budget rule that would require the Federal government to balance its budget during a recession would be:

• A) Expansionary and worsen the effects of the recession
• B) Contractionary and worsen the effects of the recession
• C) Contractionary and counter the effects of the recession
• D) Expansionary and counter the effects of the recession

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Definitions:

Interim Financial Report

Financial statements that are issued for periods shorter than a fiscal year, typically quarterly, providing investors and others with an update on a company's financial health.

Gross Profit

The difference between revenue and the cost of goods sold, indicating the profitability of a company's core activities.

Revenue Test

An analysis or criterion used to determine whether a particular source of income qualifies as revenue for accounting or tax purposes.

Profit Or Loss Test

A financial metric used to determine if a business transaction resulted in making a profit or incurring a loss.