Automatic Fiscal Policy

question 38

Multiple Choice

Automatic fiscal policy

• A)is triggered by the state of the economy.
• B)involves only a change in government outlays and no change in revenues.
• C)involves only a change in personal income tax rates.
• D)requires action by Parliament.
• E)occurs during recessions but not during expansions.

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Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor, such as labor or capital.

Marginal Resource Cost

The additional cost incurred by acquiring one more unit of a resource, such as labor or raw materials.

Labor Demand Data

Information that reflects the quantity of labor that employers are willing to hire at various wage rates.

Labor Supply Data

Information or statistics that represent the total number of hours that workers are willing and able to work at different wage rates in a given time period.