Figure 4-6 -In the Figure Above, Suppose We Are Initially at Point

question 77

Multiple Choice

Figure 4-6
-In the figure above, suppose we are initially at point 2. A reduction in government spending causes income to change by ________ and the interest rate to change by ________ than would be the case in the Chapter 3 model.

• A) more, more
• B) more, less
• C) less, more
• D) less, less

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Definitions:

Closing the Revenue

Closing the Revenue involves transferring the revenue earned during an accounting period to the capital account to prepare the company's books for the next period.

Original Investments

The capital that the owners or shareholders initially put into the business to fund operations.

Net Loss

The deficit that occurs when a company's total expenses exceed its total revenues, indicating a negative profit for a specific period.

Salary Allowances

Fixed amounts of money or compensations over and above regular salaries or wages that employees are entitled to receive under certain conditions or for specific purposes.