-Refer to the Above Diagram Where T Is Tax Revenues

question 198

Multiple Choice

-Refer to the above diagram where T is tax revenues and G is government expenditures.All figures are in billions of dollars.If the full-employment and actual GDP are each $400 billion,government can balance its budget by:

• A) increasing T by $40 billion.
• B) reducing G by $20 billion.
• C) reducing T by $20 billion.
• D) increasing T by $10 billion and reducing G by $20 billion.

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Definitions:

Accounts Receivable Turnover

A ratio that measures how effectively a company collects its receivables or the efficiency of its credit policies.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Times Interest Earned

A ratio that assesses the risk that bondholders will not receive their interest payments or that interest payments will not be made if earnings decrease. The ratio is computed as income before income tax expense plus interest expense divided by interest expense.