Which of the Following Actions Could Be Undertaken If the Government

question 137

Multiple Choice

Which of the following actions could be undertaken if the government wants to close an inflationary gap?

• A) Increase taxes and reduce government spending.
• B) Reduce taxes and increase government spending.
• C) Increase taxes and increase government spending.
• D) Reduce taxes and reduce government spending.

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Definitions:

Capital Budgeting

The process used by companies to evaluate and prioritize major investments and expenditures.

Capital Structure

The mix of various forms of external funds and equity that a company uses to finance its activities.

Working Capital

The difference between a company's current assets and current liabilities, representing its short-term liquidity and operational efficiency.

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing operations, and communicating with the board of directors.