Automatic Stabilizers Create ________ During Recessions from Increased Government Spending

question 15

Multiple Choice

Automatic stabilizers create ________ during recessions from increased government spending on welfare and unemployment insurance, and reduced tax revenues, and create _________ during peak growth periods of the economy from reduced government welfare spending and increased tax revenues.

• A) fiscal stimulus, fiscal contraction
• B) fiscal stimulus, fiscal stimulus
• C) fiscal contraction, fiscal stimulus
• D) fiscal contraction, fiscal contraction

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in the data set differ from the mean.

Standard Normal Random Variable

A random variable with a mean of 0 and a standard deviation of 1 under the normal distribution.

Probability

Refers to the degree of certainty associated with the occurrence of a specific outcome in a random event.

z

Often symbolizes the standard score in statistics, indicating how many standard deviations an element is from the mean.