Because automatic stabilizers lower transfer payments and raise tax receipts as an economy recovers from a recession, they:
A. slow down the pace of an economic recovery.
B. accelerate the recovery from a recession until inflation starts to develop, at which point they slow the recovery.
C. do not affect the pace of an economic recovery.
D. increase the pace of an economic recovery.
Answer: A
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What is the output gap? How does it change when the economy goes into recession?
What will be an ideal response?
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing price it will charge?
A) It should charge a range of prices from $40 to $16. B) It should charge a range of prices from $40 to $12. C) $2 D) $8
During an unanticipated inflation
A. creditors are hurt and debtors are helped. B. both creditors and debtors are helped. C. creditors are helped and debtors are hurt. D. both creditors and debtors are hurt.
For the following pairs of goods, which producer is more likely to charge a bigger markup?