Automatic stabilizers are government programs that:
A. exaggerate the ups and downs in aggregate demand without legislative action.
B. bring expenditures and revenues automatically into balance without legislative action.
C. shift the budget toward a deficit when the economy slows but shift it toward a surplus during an expansion.
D. increase tax collections automatically during a recession.
Answer: C
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Which of the following statements is correct?
I. A drop in the foreign exchange value of the dollar would decrease aggregate demand II. A decrease in the amount of money in circulation would increase aggregate demand A) I only B) II only C) Both I and II D) Neither I nor II
According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, which of the following statements is TRUE?
A) Chen will be willing to produce only good X and trade units of that good to Holly as long as he receives more than 0.5 units of good Y from her in exchange. B) Holly will be willing to produce only good X and trade units of that good to Chen as long as she receives less than 2.5 units of good Y in exchange. C) Chen will be willing to produce only good Y and trade units of that good to Holly as long has he receives less than 2 units of good X from her in exchange. D) Holly will be willing to produce only good Y and trade units of that good to Chen as long as she receives less than 0.4 unit of good X in exchange.
If the fractional reserve system did not exist,
a. the banking system could not create money. b. there would be no effect on the ability of the banking system to create money. c. banks would loan out its required reserves. d. banks would be highly susceptible to bank runs. e. the banking system would realize the money multiplier.
"To be useful, a model must be completely realistic." Evaluate
What will be an ideal response?