Suppose Fiscal Policy Makers Implement a Policy to Reduce the Size

question 21

Multiple Choice

Suppose fiscal policy makers implement a policy to reduce the size of a budget deficit.Based on the IS-LM model,we know with certainty that the following will occur as a result of this fiscal policy action.

• A)investment spending will decrease.
• B)investment spending will increase.
• C)there will be no change in investment spending.
• D)investment spending may increase,decrease,or not change.
• E)none of the above

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of inventory based on the average cost of all similar items in the inventory, considering their weight.

Process Costing System

An accounting system used for homogenous products, where costs are accumulated and then assigned to units of output on an average basis.

Work in Process Account

An account that tracks the costs associated with goods that are in the process of being manufactured but are not yet complete.

Manufacturing Overhead Cost

Indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of managing the factory and maintenance.