The Presence of Automatic Stabilizers in an Economy Suggest That

question 63

Multiple Choice

The presence of automatic stabilizers in an economy suggest that _____.

• A) the time lags in implementing fiscal policy are likely to be long
• B) in a recession, tax receipts will increase
• C) the government need not use fiscal policy to monitor economic activity
• D) structural deficits in an economy are likely to be very high

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Definitions:

Production

The process of creating goods or services by combining labor, capital, and resources to meet consumer demands.

Market Wage

The prevailing rate of pay for labor in a particular job market, determined by the supply and demand for labor in that market.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate in a given period of time.

Maximize Profits

The process by which a firm chooses its production level and pricing strategy to earn the highest possible profit based on its costs and market demand.