When Comparing a $100 Billion Increase in Government Expenditure to a $100

question 78

Multiple Choice

When comparing a $100 billion increase in government expenditure to a $100 billion decrease in tax revenue,the effect of the increase in government expenditure on aggregate demand is

• A)greater than the effect of the tax decrease.
• B)equal to the effect of the tax decrease.
• C)less than the effect of the tax decrease.
• D)positive whereas the effect of the tax decrease is negative.
• E)negative whereas the effect of the tax decrease is positive.

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Definitions:

Cash Purchase

A transaction where goods or services are bought and paid for with physical currency at the time of purchase.

Inventory

Inventory encompasses the raw materials, work-in-progress goods, and the finished products that a company holds with the intention of selling them to earn revenue.

Multi-Column Purchases Journal

A specialized accounting journal that records the purchase transactions of a business in multiple columns for different types of purchases.

Accounts Payable Account

An accounting entry that represents a company's obligation to pay off a short-term debt to its creditors or suppliers.