The Federal Budget Deficit Acts as an Automatic Stabilizer Because

question 265

Multiple Choice

The federal budget deficit acts as an automatic stabilizer because

• A)government tax revenues decrease during a recession.
• B)unemployment insurance payments decrease during a recession.
• C)food stamp payments increase during expansionary periods.
• D)Medicaid payments increase during expansionary periods.

---

Definitions:

Forward Rate

An agreed-upon exchange rate for currencies to be traded at a future date, used in forward contracts.

Israeli Shekel

The official currency of Israel.

Spot Rate

The current market price of a currency, commodity, or security for immediate delivery and payment.

Swiss Francs

The legal currency of Switzerland, known for its stability and used as a benchmark or safe-haven currency in international finance.