Built-In Stability Means That

question 101

Multiple Choice

Built-in stability means that:

• A)an annually balanced budget will automatically offset the pro-cyclical tendencies created by state and local finance and thereby stabilizes the economy.
• B)with given tax rates and expenditures policies a rise in domestic income will reduce a budget deficit or produce a budget surplus while a decline will result in a deficit or a lower budget surplus.
• C)Parliament will automatically change the tax structure and expenditure programs to correct upswings and downswings in business activity.
• D)government expenditures and tax receipts automatically balance over the business cycle, though they may be out of balance in any single year.

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Definitions:

Supply Curve

A graphical representation that shows the relationship between the price of a good and the quantity supplied, illustrating how changes in price influence supplier behaviour.

Supply Curve

A graphical depiction that shows the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing and able to provide, at given prices.

Supply Curve

A graphical representation showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.

Determinant Of Supply

A factor that influences the quantity of a good or service that producers are willing to offer for sale at a given price over a period.