Automatic Stabilizers Reduce Fluctuations in GDP by

question 2

Multiple Choice

Automatic stabilizers reduce fluctuations in GDP by

• A) eliminating spending shocks
• B) increasing the amount of spending each year
• C) reducing the additional spending that occurs in each round of the multiplier
• D) increasing saving
• E) reducing the need for government involvement in the economy

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Definitions:

Nominal Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a country in a given period, measured in current prices without adjusting for inflation.

Inflation

A general increase in prices and fall in the purchasing value of money over time.

Gross Domestic Product (GDP)

The aggregate value of all products and services generated inside a nation's boundaries over a particular time frame, serving as a comprehensive indicator of economic performance.

Gross Domestic Product (GDP)

The sum total of the market or economic value of all products and services finalized within a country's geographical limits during a defined period.