As income increases during the recovery from a recession, automatic stabilizers will:
A. reduce taxes on high-income individuals and raise taxes on the poor, increasing economic inequality.
B. increase taxes and decrease government spending, slowing the recovery.
C. increase taxes and increase government spending, increasing the overall size of the government.
D. reduce taxes and increase government spending, accelerating the recovery.
Answer: B
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One of the serious drawbacks of the deposit insurance system in the United States is that:
A. the system took away the Federal Reserve's ability to change reserve requirements. B. if insured intermediaries make many bad loans, the taxpayers may be responsible for covering the losses. C. the system took away the Federal Reserve's ability to conduct open-market operations. D. bank failures continue to occur regularly.
According to the Real Business Cycle model real wages should
A) remain constant. B) fall during recessions. C) rise during recessions. D) stay the same during recessions but rise during expansions.
Another term for the equilibrium price is
A) excess demand. B) nominal price. C) law of demand. D) market clearing price.
Within the aggregate demand/aggregate supply framework, what does the quantity produced and purchased in the goods and services market represent?
What will be an ideal response?