Changes in Expenditures and Taxes That Occur Through Automatic Stabilizers

question 30

Multiple Choice

Changes in expenditures and taxes that occur through automatic stabilizers

• A) shift the aggregate demand curve to the right in the event of an economic expansion.
• B) shift the aggregate demand curve to the left in the event of an economic contraction.
• C) do not shift the aggregate demand curve.
• D) cause a movement up along the aggregate demand curve the event of an economic expansion and a movement down along the aggregate demand curve the event of an economic contraction.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing its current assets to its current liabilities.

Liquidity Ratio

Measures a company's ability to meet its short-term obligations using its most liquid assets.

Profit Margin

A profitability ratio calculated by dividing net income by revenue, expressing the percentage of revenue that translates into net income.