Automatic Fiscal Policy Occurs

question 8

Multiple Choice

Automatic fiscal policy occurs

• A)because monetary policy is effective.
• B)when the Parliament makes changes to transfer payment programmes.
• C)because tax revenues and transfer payments fluctuate with real GDP.
• D)because government expenditures on goods and services fluctuate with real GDP.

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Definitions:

Maximizing Utility

The economic principle that individuals seek to obtain the highest level of satisfaction or benefit from their consumption choices.

Irrational Choice

Making decisions that go against or do not align with the rational decision-making model, often leading to less optimal or desirable outcomes.

Parallel Shift

occurs when a graph's curve moves left or right without changing its shape, often used in reference to demand or supply curves.

Relative Prices

The price of one good or service compared to another, reflecting its scarcity or value in exchange.