When government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this is an example of:
A. the cyclically adjusted budget.
B. impounding.
C. money creation.
D. built-in stability.
Answer: D
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Social Security retirement benefits are increased automatically each year at the rate of inflation
Indicate whether the statement is true or false
Suppose a steel firm and a cookware company merge. This merger would be classified as:
a. a horizontal merger. b. a vertical merger. c. a conglomerate merger. d. either a horizontal or conglomerate merger, depending on the nationality of the companies. e. either a horizontal or conglomerate merger, depending on the market shares of the two companies.
Assume that the Fed increases the money supply when there is substantial unemployment in the economy. According to the quantity theory of money, if velocity is constant, then:
a. the price level will decrease. b. real GDP will decrease. c. nominal GDP will increase. d. nominal GDP will decrease. e. real GDP will remain constant while price level will decrease.
Suppose that at the current level of output, price = $12, MC = $4, AVC = $7, and ATC = $11. Which of the following is TRUE?
A. The firm should decrease output. B. The firm should shut down. C. The firm should increase output. D. The firm should maintain the current level of output.