If There Are Automatic Stabilizers but No Deliberate Action by Policymakers

question 18

Multiple Choice

If there are automatic stabilizers but no deliberate action by policymakers, how would government expenditures and taxes change as output falls?

• A) Both government expenditures and taxes fall.
• B) Both government expenditures and taxes rise.
• C) Government expenditures rise and taxes fall.
• D) Government expenditures fall and taxes rise.

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Definitions:

Fully Amortized

Pertains to a loan or mortgage that has been completely paid off, principal and interest, over its term.

Direct Combination Costs

Expenses directly associated with the execution of a business combination, such as legal fees, consulting fees, and other administrative costs.

Goodwill

An intangible asset representing the future economic benefits arising from assets that are not capable of being individually identified and separately recognized.

Acquisition

The process of acquiring control over another corporation through purchase or stock exchange.