Which of the Following Statements Is Correct

question 68

Multiple Choice

Which of the following statements is correct?

• A) Built-in stability only partially offsets fluctuations in economic activity.
• B) Built-in stability works in halting inflation, but it cannot alleviate unemployment.
• C) Built-in stability can be relied on to eliminate completely any fluctuation in economic activity.
• D) Built-in stability has eliminated the need for discretionary fiscal policy.

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Definitions:

Government Transfers

Payments by the government to individuals or entities without the expectation of direct repayment or work in return, often taking the form of welfare, subsidies, or grants.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Economic Analysis

A systematic approach to examining the allocation of resources, focusing on the production, distribution, and consumption of goods and services.

Rent-Seeking Activities

Efforts to increase one's own wealth without producing new wealth, often through manipulating the political environment to obtain economic gains such as subsidies or tariffs.