Automatic Stabilizers Built into Our System of Fiscal Policy

question 19

Multiple Choice

Automatic stabilizers built into our system of fiscal policy

• A) make the marginal propensity to consume smaller than it otherwise would be.
• B) make the investment multiplier larger than it otherwise would be.
• C) make the IS curve steeper than it otherwise would be.
• D) make monetary policy less effective in moving GDP around in the short run than it otherwise would be.
• E) all of the above.

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Definitions:

Contagion

The process by which extreme passions supposedly spread rapidly through a crowd like a contagious disease.

Labor Efficiency

The measure of the output (in terms of goods produced or services rendered) per unit of labor input.

Variance

The difference between planned, budgeted, or standard amounts and actual amounts in accounting and statistics.

July

The seventh month of the year in the Gregorian calendar.