The Federal Budget Deficit Acts as an Automatic Stabilizer Because

question 265

Multiple Choice

The federal budget deficit acts as an automatic stabilizer because

• A)government tax revenues decrease during a recession.
• B)unemployment insurance payments decrease during a recession.
• C)food stamp payments increase during expansionary periods.
• D)Medicaid payments increase during expansionary periods.

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Definitions:

Flow Variable

A quantity that is measured over a specified period of time, such as income or expenditure.

Stock Variable

A measure of something at a particular point in time, such as the amount of money you have with you right now.

Periodic Variable

A variable that changes at regular intervals over time, often used in the analysis of time series data.

Measured

Evaluated or quantified in terms of extent, dimensions, quantity, or capacity.