A Major Advantage of the Built-In or Automatic Stabilizers Is

question 198

Multiple Choice

A major advantage of the built-in or automatic stabilizers is that they

• A)simultaneously stabilize the economy and reduce the absolute size of the public debt.
• B)automatically produce surpluses during recessions and deficits during inflations.
• C)require no legislative action by Congress to be made effective.
• D)guarantee that the federal budget will be balanced over the course of the business cycle.

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Definitions:

Utility Function

A mathematical representation of an individual's preference ordering over a set of goods or outcomes.

Income

The financial gain earned or received by an individual or entity, usually through work, investments, or business operations.

Nuts

Hard-shelled seeds of certain plants that are edible and often rich in nutrients such as fats, proteins, and carbohydrates.

Homothetic Preferences

Preferences where if a consumer prefers a bundle of goods A to B, they will also prefer a proportional scaling of A to the same proportional scaling of B, indicating consistent patterns of consumption regardless of income level.