If the Economy Is in an Equilibrium with Real GDP

question 108

Multiple Choice

If the economy is in an equilibrium with real GDP less than potential GDP,a fiscal stimulus could move the economy toward potential GDP by simultaneously ________ taxes and ________ government expenditures on goods and services.

• A)raising;increasing
• B)raising;decreasing
• C)cutting;increasing
• D)cutting;decreasing
• E)raising;not changing

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Definitions:

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Depreciation Expense

The allocated cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or decline in value.

Statement of Cash Flows

A report detailing how shifts in income and balance sheet figures influence the holdings of cash and its equivalents.

Future Cash Flows

Estimates of money expected to be received and paid out over future periods by a business.