An Automatic Stabilizer

question 32

Multiple Choice

An automatic stabilizer

• A) injects money into the economy during booms.
• B) extracts money from the economy during recessions.
• C) is exemplified by a program such as unemployment compensation.
• D) is exemplified by a program such as the Corps of Engineers dam-building program.

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Definitions:

Zero Percent Interest

Zero Percent Interest describes a financing or credit offer where no interest is charged on the principal amount for a specific period, typically used as a promotional strategy.

House Money Effect

The tendency of individuals to take higher risks when dealing with profits from previous bets or investments, as if playing with "house money."

Lottery

A form of gambling that involves drawing numbers at random for a prize, with varying rules and structures depending on the type.

Business Venture

An entrepreneurial enterprise or new business that is undertaken with the expectation and plan of achieving financial gains.