Automatic Stabilizers "Lean Against the Prevailing Wind" of the Business

question 86

Multiple Choice

Automatic stabilizers "lean against the prevailing wind" of the business cycle because:

• A) wages are controlled by the minimum wage law.
• B) federal expenditures and tax revenues change as the level of real GDP changes.
• C) the spending and tax multipliers are constant.
• D) they include the power of special interests.

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Definitions:

Financial Projections

Estimates of a company’s future revenues, expenses, and investments, often used for budgeting and strategic planning.

Manufacturing Facility

A dedicated location equipped with machinery and equipment for producing goods in large quantities.

Distribution System

A distribution system is the network through which a company delivers its products or services to the end consumers.

Law of Small Numbers

A cognitive bias that leads individuals to draw broad conclusions from small data sets or a limited number of observations.