An Automatic Stabilizer Is a Feature of the Economy That

question 149

Multiple Choice

An automatic stabilizer is a feature of the economy that

• A)makes prices "sticky."
• B)reduces its sensitivity to shocks.
• C)maximizes its volatility.
• D)automatically reduces recessionary trends.

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Definitions:

Compound Annual Rate

The rate at which an investment would have grown annually if it had compounded at a steady rate.

Dividends

Payments made by a corporation to its shareholder members, typically from profits.

Zero-Sum

A situation or game where the gain of one participant comes at the expense of another, resulting in a net change of zero.

Constant Growth Rate

A stable annual increase in the value of an investment, often applied in the context of dividend growth or economic expansion.