Which One of the Following Statements Is NOT True

question 183

Multiple Choice

Which one of the following statements is NOT true?

• A) Expansionary fiscal policy is employed to offset recessionary gaps.
• B) Expansionary fiscal policy has an effect on interest rates.
• C) Crowding out dilutes the effect of expansionary fiscal policy.
• D) When crowding out occurs, fiscal policy has a larger effect on aggregate demand.

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Definitions:

Fixed Budget

A budget that is established at the beginning of a period and does not change, regardless of actual performance or outcomes.

Direct Labor Rate

The cost per hour for direct labor, which includes wages of workers who are directly involved in the production of goods.

Efficiency Variances

Represents the difference between the actual input costs and the standard input costs anticipated for the production achieved.

Sales Price Variances

The difference between the actual price at which goods or services are sold and the expected (standard) sale price.