Explain how unemployment insurance acts as an automatic stabilizer
As income falls, unemployment rises. More people will apply for unemployment compensation from the government which raises government spending. An increase in government spending tends to increase aggregate demand, output, and income thereby lessening the effects of the recession.
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A tax cut intended to increase aggregate demand is an example of
A. Fiscal stimulus. B. Fiscal restraint. C. Fiscal targeting. D. Monetary restraint.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________, 
A. Rising; B; C B. Falling; A; C C. Falling; A; B D. Rising; A; C
Observational studies make an attempt to influence some variables in order to observe how changes in these variables affect outcomes.
Indicate whether the statement is true or false
Which exchange rate system requires an immediate response by a government to counter all market forces on exchange rates?
A. The floating exchange rate system B. The fixed exchange rate system C. The managed float exchange rate system D. The Bretton-Woods exchange rate system