What are the automatic stabilizers the United States has in place, and how do they function differently from discretionary fiscal policy?
What will be an ideal response?
Automatic stabilizers are provisions of the tax law that cause changes in government spending or taxes without the action of Congress or the President. The progressive income tax takes more money out of the hands of people during inflationary times and less during recessions. Unemployment compensation gives spending power to people even when they are not working due to a recession. The key difference is that automatic stabilizers work without the lags associated with discretionary fiscal policy.
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We Deliver for You is a local company that has several couriers who pick up small packages from local offices and hand deliver them to other local office buildings in same day. The managers of We Deliver for You want the couriers to make as many prompt and speedy deliveries a day as possible, and to incentivize the couriers, the managers do not pay the couriers a salary, rather a flat fee per
delivery. This payment policy will incentivize the couriers to do all of the following except which one? A) minimize their daily number of deliveries B) arrive to pick up packages promptly C) drive fast and take driving risks D) make prompt deliveries
Who is the second most powerful person in the U.S.?
a. The Fed chairman b. The Vice President c. The Secretary of State d. The speaker of the House of Representatives e. The Attorney General
An increase in the reserve ratio would be an example of
A. contractionary monetary policy. B. expansionary monetary policy. C. expansionary fiscal policy. D. contractionary fiscal policy.
If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the price elasticity of demand is equal to:
A. 0.5. B. 5. C. 2. D. 0.05.