Explain what is meant by automatic stabilizers and how they work to minimize fluctuations in economic activity
What will be an ideal response?
Automatic stabilizers refer to the effect that changes in economic activity have on the size of the actual deficit. The fact that T will automatically fall as Y falls, will dampen the effects of any negative shock on the economy.
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The Maastricht Treaty eliminated passport controls at borders with the European Union
Indicate whether the statement is true or false
Refer to the given figure and assumptions. If the government effectively prevents illegal immigrants from working in this labor market, the equilibrium wage and level of employment are, respectively:
(1) Employers in this market are willing and able to ignore minimum wage laws;
(2) S d represents the supply of domestic-born (and legal immigrant) workers; (3) S t represents
the total supply of workers in this labor market (S d plus illegal immigrants); and (4) unless
otherwise stated, illegal immigration is not effectively blocked by the government.
A. $5.50 and 250,000.
B. $5.50 and 350,000.
C. $8.00 and 350,000.
D. $5.50 and 450,000.
Assume that the yield on a security has two possible outcomes. There is a 60 percent chance it will yield 10 percent and a 40 percent chance it will yield 5 percent. The expected yield for this security is
A) 10.0 percent. B) 8.0 percent. C) 7.5 percent. D) 6.0 percent.
The Dodd-Frank Act removed which group from decisions regarding the presidents of Federal Reserve Banks?
A) Class A directors B) Class B directors C) Class C directors D) Board of Governors