The Assertion That Increases in Government Spending and Decreases in Taxes

question 117

Multiple Choice

The assertion that increases in government spending and decreases in taxes are largely offset by increases in savings is called

• A) implementation lag.
• B) impact lag.
• C) savings lag.
• D) the new classical critique.
• E) crowding-out.

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Definitions:

Legal Capital

The minimum amount of capital that a company is required to maintain by law, often to protect creditors from the company's potential losses.

Treasury Stock

Treasury stock refers to shares that were once part of the outstanding shares of a company but were repurchased by the company itself.

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders but not retired, thus reducing the amount of outstanding stock on the open market.

Cash Dividend

A cash distribution given to shareholders from a company's earnings.