With Discretionary Policy Making, Fiscal and Monetary Policies Are Usually

question 198

Multiple Choice

With discretionary policy making, fiscal and monetary policies are usually

• A) undertaken in response to or anticipation of some change in the overall economy.
• B) set according to pre-established standards that do not take into account any changes in the economy.
• C) immune to any political overtones.
• D) immune to any lag times that might counter their effectiveness.

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Definitions:

Deferred Income Taxes

Taxes owed for the current period but not yet required to be paid, due to differences between financial accounting and tax reporting.

Temporary Difference

Differences between accounting income and taxable income that are expected to reverse in the future, affecting deferred tax calculations.

Permanent Difference

Transactions that cause a difference between the tax basis and the book value of assets and liabilities, which will not reverse over time.

Interperiod Tax Allocation

The process of allocating income taxes over different accounting periods due to temporary differences between financial accounting and tax reporting.