Which of the following correctly describes how an automatic stabilizer would function?
a. During an economic expansion, incomes rise, and thus our progressive income tax claims a larger portion of income, slowing growth in disposable income.
b. During an economic expansion, net taxes decline, since income grows faster than taxes, and because there is more income being made to support transfer payments to unemployed and disabled people.
c. During a recession, progressive income tax claims a larger portion of income than during periods of economic growth, and government spending declines in order to balance the budget.
d. During a recession, an increase in the flow of unemployment insurance taxes from the income stream into the unemployment insurance fund, reduces consumption and aggregate demand.
a
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
If a commodity is inexpensive and its total utility is great,
A. it is an inferior good. B. it is plentiful. C. its marginal utility is high. D. the ratio of price to marginal utility is very high.
At its maximum during the Great Depression unemployment reached approximately ___ percent of the labor force?
a. 15 b. 25 c. 50 d. 75
Which of the following is a likely result of the deregulation of the airline industry that might benefit consumers?
a. a wage increase for union pilots b. a possible decline in airline safety c. one firm's emerging as an unregulated monopoly d. loss of service to unprofitable routes e. a decrease in air fares