What is meant by saying that automatic fiscal policy is countercyclical?
What will be an ideal response?
Automatic fiscal policy includes unemployment insurance and the proportional nature of the tax system. These adjust mechanically to stimulate an economy that is slowing down and put the brakes on an economy that is speeding up. The reason for that is that when the economy slows down tax payments decrease and payments for things like unemployment insurance increase, providing stimulus automatically. Similar, when the economy speeds up tax payments increase and payments of things like unemployment insurance decrease, thus applying the brakes automatically. Thus automatic fiscal policy, by stimulating a slowing economy and cooling off a hot economy, acts counter-cyclically to resist fluctuations in aggregate expenditure and keep the economy stable.
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Many fast-food restaurants have signs on their cash registers that read, "Your meal is free if the cashier does not give you a receipt". What might be the purpose of such a sign? Hint: there is a moral hazard problem here
What will be an ideal response?
A clear conclusion from offshoring debates and analyses is that:
a. Offshoring increases overall unemployment in the nation from which offshoring takes place. b. Offshoring's main effect is to decrease GDP in the nation from which offshoring takes. c. Offshoring could increase or decrease unemployment in the nation from which it takes place; the result depends on the circumstances. d. Offshoring results in net losses to the global economic community.
A graph illustrating how one variable changes over time is a Cartesian coordinate system.
Answer the following statement true (T) or false (F)
Carlos can buy either sushi or eggrolls. If the prices of sushi and eggrolls triple and Carlos's money income doubles, we can deduce that Carlos's budget constraint will
A. shift out but remain parallel to the old one. B. shift in but remain parallel to the old one. C. swivel in so that the slope of the budget constraint is doubled. D. remain unchanged.