A Balanced Budget Would Require That When Real GDP Was

question 33

Multiple Choice

A balanced budget would require that when real GDP was growing rapidly,

• A)the government raise taxes or cut expenditures.This would increase the magnitude of economic fluctuations.
• B)the government raise taxes or cut expenditures.This would decrease the magnitude of economic fluctuations.
• C)the government cut taxes or raise expenditures.This would increase the magnitude of economic fluctuations.
• D)the government cut taxes or raise expenditures.This would decrease the magnitude of economic fluctuations.

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Definitions:

Common Stock

Equity shares issued by a corporation as ownership evidence, granting voting rights and a share in the company's profits.

Dividends Payable

Liabilities on a company's balance sheet representing the amount of dividends declared by the board of directors but not yet paid to shareholders.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.

Retained Earnings

is the portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment or debt payment.