Examples of Automatic Stabilizers Include I

question 137

Multiple Choice

Examples of automatic stabilizers include I. food stamps. II. unemployment benefits. III. implementation lags.

• A) I only
• B) II only
• C) I and II only
• D) II and III only

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Definitions:

Giffen Good

A product that paradoxically sees an increase in demand as its price increases, violating the basic law of demand due to the income effect overshadowing the substitution effect.

Inferior Good

A type of good whose demand decreases as the income of consumers increases, opposite of a normal good.

Substitution Effect

The change in consumption patterns due to a change in the relative price of goods, leading consumers to substitute away from higher-priced goods toward lower-priced ones.

Income Effect

How an adjustment in income levels for individuals or the economy affects the demand for goods or services.