Which of the Following Statements Is Correct

question 102

Multiple Choice

Which of the following statements is correct?

• A)Built-in stability only partially offsets fluctuations in economic activity.
• B)Built-in stability works in halting inflation, but it cannot alleviate unemployment.
• C)Built-in stability can be relied on to eliminate completely any fluctuation in economic activity.
• D)Built-in stability overcorrects for fluctuations in economic activity; for example, it may change a small expansion into a recession.

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Definitions:

Retire Bonds

The process of paying off or redeeming bonds before or at maturity to eliminate debt obligations.

Investing

The act of allocating resources, often money, in the hope of generating an income or profit in the future.

Yield to Maturity

The total rate of return anticipated on a bond if it is held until the date it matures, considering all payments of principal and interest.

Bond

A fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a fixed interest rate.