For Each of the Following Policies Indicate Whether the Policy

question 67

Essay

For each of the following policies indicate whether the policy is i. a monetary or a fiscal policy, ii an active or a passive policy, and iii a policy by rules or with discretion: a. the central bank follows a policy of all owing the money supply to grow at a constant 4 percent per year;
b. a government follows a policy of keeping government spending over a calendar year equal to government revenue over the cal endar year;
c. the central bank uses judgment to adjust the growth of the money supply based on expectations of what will happen to output and inflation over the next five years.
d. the government keeps tax laws unchanging and allows government spending to change, depending on which spending bills are passed by the legi sl ature.
e. the central bank follows a policy of adjusting the money supply according to a formula based on deviations of unemployment from the natural rate of unemployment.

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Definitions:

FASB/IASB Exposure Draft

A draft report proposed by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) for public comment on proposed changes to accounting standards.

Financial Statements

Reports that provide detailed information about a company's financial status, including balance sheets, income statements, and cash flow statements.

Operating Lease

An agreement enabling a party to rent an asset without the intention or requirement to purchase it at the end of the lease term.

Lessee's Income Statement

An income statement showing the financial results of a lessee's operations, including the impact of leasing costs.