The Presence of Automatic Stabilizers Means That the Federal Budget

question 5

Multiple Choice

The presence of automatic stabilizers means that the federal budget deficit is _______ than it otherwise would be in a recession and _______ than it otherwise would be in an expansion.

• A) smaller; smaller
• B) larger; smaller
• C) smaller; larger
• D) larger; larger

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Acid-Test Ratio

is a financial metric that assesses a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Balance Sheet

An accounting document summarizing assets, liabilities, and owners' equity of a business on a specific date.

Sales On Account

Transactions where goods are sold and payment is deferred, allowing the buyer to pay at a later date, typically generating accounts receivable for the seller.