Which of the Following Is an Advantage of Automatic Stabilizers

question 62

Multiple Choice

Which of the following is an advantage of automatic stabilizers?

• A) The lag for automatic stabilizers is relatively long.
• B) It is much easier to measure the impact of automatic stabilizers compared to the impact of discretionary fiscal policy.
• C) There is no administrative cost to implementing automatic stabilizers.
• D) Because they affect disposable personal income directly, automatic stabilizers act swiftly to reduce the degree of changes in real GDP.

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Definitions:

Government Intervene

Actions taken by a government to influence or directly manage an economy or specific markets, often aiming to correct market failures, redistribute resources, or stabilize the economy.

Market

A place or mechanism where buyers and sellers interact to trade goods, services, or assets, determining prices through supply and demand.

Money Supply

The entirety of cash, coins, and checking and savings account balances that make up the financial assets in an economy at a specific point in time.

Inflation

The rate at which the comprehensive cost levels of goods and services rise, diminishing the effectiveness of financial power.