A Major Advantage of Built-In or Automatic Stabilizers Is That

question 14

Multiple Choice

A major advantage of built-in or automatic stabilizers is that they

• A) guarantee the federal budget will be balanced over the course of the business cycle.
• B) require no Congressional action to be effective.
• C) automatically produce surpluses during recessions and deficits during inflation.
• D) require discretionary actions on the part of Congress before they exert an impact on output and employment.

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Definitions:

Compounded

In finance, refers to a method where interest earned is added to the principal, so that, from that moment on, the interest that has been added also earns interest.

Exponential Rate

The rate at which something grows or decays, characterized by a constant ratio over equal increments of time.

Half-Life

Half-life is a term used in nuclear physics and chemistry to describe the time required for one half of the atoms of a radioactive substance to undergo decay.