Which of the Following Scenarios Is an Example of an Automatic

question 72

Multiple Choice

Which of the following scenarios is an example of an automatic stabilizer?

• A) Increased unemployment rates cause the government to pay out more in unemployment insurance.
• B) Tax revenues increase due to a rise in nominal income during an economic expansion.
• C) Unemployment rates are reduced during an economic expansion and so government spending on TANF payments decreases.
• D) All of these scenarios exemplify automatic stabilizers.

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Definitions:

Commission Structure

Commission structure refers to the schedule or rate at which commissions are paid to sales employees or agents, based on their sales performance or revenue generated.

Per Share

A metric that indicates the value of a financial measure (like earnings or dividends) divided by the total number of shares outstanding.

CFA Institute Standards

Ethical and professional guidelines set forth by the CFA Institute to ensure integrity in financial analysis and investment professions.

SIPC

Securities Investor Protection Corporation, an organization that protects investors from the loss of cash and securities in case a brokerage firm goes bankrupt.