An automatic stabilizer:
a. increases inflationary pressure during expansions
b. Increases the drop in disposable income during recessions and increases the jump in disposable income during expansions.
c. reduces the drop in disposable income during recessions and reduces the jump in disposable income during expansions.
d. increases tax revenue relative to government spending throughout the business cycle.
e. decreases tax revenue relative to government spending throughout the business cycle.
c
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State provision of free healthcare may encourage individuals to engage in unhealthy behavior, such as excessive smoking or consumption of alcohol. This is an example of ________
A) moral hazard B) a positive externality C) adverse selection D) anchoring
Who does NOT earn economic rent in a competitive factor market?
A) No one B) Everyone C) The last factor of production hired D) The inframarginal workers E) Only owners of physical properties earn economic rents
Suppose a firm wants to build a new factory that would add pollution to an already polluted area. Under an offset program, the firm must:
a. install scrubbers and other government-mandated equipment. b. purchase pollution permits from the government. c. reduce or eliminate an old pollution source in the area. d. pay a tax which depends on the amount of pollution created.
To eliminate an inflationary gap, the expenditure schedule should
a. shift upward. b. shift downward. c. become flatter. d. become steeper.