Programs that automatically increase government spending (relative to revenue) during a recession and automatically decrease government spending (relative to revenue) during an economic boom are called:
A. discretionary fiscal policy.
B. supply-side programs.
C. automatic stabilizers.
D. tax credits.
Answer: C
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The above figure shows the utility of wealth curve for a homeowner whose only possession is a $50,000 house
If there is a 20 percent chance that the home could be entirely destroyed, would this person buy a $20,000 insurance policy to replace the house if destroyed? A) No, it is too expensive. B) No, he is not risk averse. C) Yes, the homeowner would pay even more. D) Yes, this is the most the homeowner would pay.
Foreign direct investment occurs when a Chinese corporation
A) opens a new Chinese factory. B) purchases stock issued in China. C) purchases 1,000 shares of stock issued by an American company. D) opens a new factory in France.
Which of the following are complementary goods?
A) sport utility vehicles and gasoline B) butter and margarine C) beer and wine D) DVDs and videocassettes
The rapid speed with which the stimulus bill passed through both houses of Congress and was signed by the President could be used as an argument for
a. activist fiscal policy. b. activist monetary policy. c. expansionary fiscal policy. d. contractionary monetary policy.