Automatic stabilizers
a. increase the problems that lags cause in using fiscal policy as a stabilization tool.
b. are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession.
c. are changes in taxes or government spending that policy makers quickly agree to when the economy goes into recession.
d. All of the above are correct.
b
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Saving is not a problem in the classical model because
A) savers and investors are the same people. B) interest rates are flexible, and savings were channeled into investment. C) the classical economists assume that saving was beneficial to people for retirement. D) saving would be spent by consumers eventually.
In an analytical sense, unions can be thought of as
A) setters of minimum wages. B) monopoly buyers of workers. C) generators of inflation. D) monopsonies.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
Suppose a hurricane causes a great deal of destruction in Texas. After the hurricane, it takes much longer than usual for the reconstruction of homes to take place. A possible explanation for this is
A) greed by suppliers of construction materials increased. B) government prevented price gouging during the reconstruction period. C) prices of construction materials fell in the rest of the nation D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.