On a Graph Showing the Influence of Automatic Stabilizers on the Economy

question 22

Multiple Choice

On a graph showing the influence of automatic stabilizers on the economy, government expenditures on transfer payments and real GDP have a(n) :

• A) direct relationship as shown by an upward-sloping line.
• B) direct relationship as shown by a downward-sloping line.
• C) inverse relationship as shown by an upward-sloping line.
• D) inverse relationship as shown by a downward-sloping line.

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Definitions:

Capital

Economic resource that is used in the production of goods and services. It includes tools, buildings, machinery, and equipment.

Either-Or Decision

A decision-making process that involves choosing between two mutually exclusive options or paths.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns, not directly involving monetary payment.

Marginal Analysis

The study of marginal decisions.