When an Economy Dips into Recession, Automatic Stabilizers Will Tend

question 16

Multiple Choice

When an economy dips into recession, automatic stabilizers will tend to

• A) enlarge the budget deficit (or reduce the surplus).
• B) reduce the budget deficit (or increase the surplus).
• C) ensure that the budget remains in balance.
• D) expand the supply of money and, thereby, stimulate aggregate demand.

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Definitions:

Equipment Scrapped

The disposal of assets, specifically industrial or manufacturing equipment, that are no longer useful and cannot be sold, often involving removal from the company's books and physical premises.