Taxes and Government Expenditures That, Without Need for Additional Government

question 86

Multiple Choice

Taxes and government expenditures that, without need for additional government action, change in response to changes in the level of economic activity are examples of

• A) cyclically balanced budgets.
• B) built-in monetary stabilizers.
• C) discretionary fiscal variables.
• D) automatic fiscal policy.

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Definitions:

Excess Demand

Occurs when the quantity demanded of a good or service at a particular price exceeds the quantity supplied, leading to upward pressure on prices.

Excess Supply

The situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Absolute Advantage

The ability of an entity to produce a good or perform a service at a lower cost per unit than another entity with the same resources.

Gains From Trade

The economic benefits or advantages that arise from trading goods, services, or resources between individuals, organizations, or countries, typically resulting from specialization and the division of labor.