An example of an automatic stabilizer is
A. the raising of taxes on cigarettes to discourage smoking to stabilize health-care costs.
B. the Congressional decision to increase unemployment benefits in a recession.
C. the decision of the President to cut taxes in a recession.
D. the progressive tax system.
Answer: D
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If the real rate of interest is the same internationally, then the nominal interest rates differ solely by the expected inflation differential in two countries
Indicate whether the statement is true or false
The most important reason for why some people have higher income than others is ______.
Fill in the blank(s) with the appropriate word(s).
In the aggregate expenditures model, when output (real GDP) is greater than aggregate expenditure (AE) firms will
A. increase planned aggregate expenditure. B. reduce planned aggregate expenditure. C. increase production. D. reduce production.
J.T. Smith's company, Gamemaker, sells gambling equipment to gaming service companies. Since the quality of the equipment is difficult to monitor and gamblers are often the source of machine failure, Smith could cheat on the level of machine quality. However, Smith has a strong quality assurance program. A primary reason for that may be
A. the asymmetric information Smith holds on quality. B. company reputation. C. the need for reinforcement. D. cost containment.