The Automatic Mechanism Can Best Be Described as

question 61

Multiple Choice

The automatic mechanism can best be described as

• A) the process of the economy adjusting back to potential GDP without any action taken by the government.
• B) the result of monetary policy implemented by the Fed restoring full employment.
• C) how fiscal policy is used to return the economy to its potential.
• D) using rule-based policies to stabilize the economy.

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Definitions:

Amortization

The gradual reduction of the book value of an intangible asset or loan balance over time through regular payments.

Net Income

The net income of a company following the deduction of all expenses and taxes from its total revenues.

Dividends

Payments made by a corporation to its shareholders, usually from profits, as a distribution of earnings.

Investment

The allocation of resources, usually financial, with the expectation of generating an income or profit.