During economic contractions, transfer payments such as welfare benefits _____.
a. automatically increase, reducing income further
b. automatically increase, reducing the impact of the contraction on disposable income.
c. automatically decrease because tax revenues fall and welfare benefits are no longer affordable.
d. are decreased as a discretionary move on the part of Congress to stimulate expansion.
e. are increased as a discretionary move on the part of Congress to cushion recipients against the negative effects of economic contraction.
b
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According to this Application, the Fed started paying interest to banks on reserves. All else equal, this would tend to ________ on a bank's balance sheet
A) increase reserves B) increase loans C) increase deposits D) all of the above
If a monopolist faces a linear demand curve, its marginal revenue curve will be:
A) horizontal. B) vertical. C) twice as steep as the demand curve. D) four times as steep as the demand curve.
The required reserve ratio is the percentage of total deposits that the Fed requires a bank to hold in vault cash or on deposit with the Fed
a. True b. False Indicate whether the statement is true or false
An increase in the interest rate causes
A) a movement up along the money demand curve. B) a movement down along the money demand curve. C) the money demand curve to shift to the left. D) the money demand curve to shift to the right.