An Advantage of Automatic Stabilizers Over Discretionary Fiscal Policy Is

question 204

Multiple Choice

An advantage of automatic stabilizers over discretionary fiscal policy is that

• A)automatic stabilizers are not subject to the same time lags as discretionary fiscal policy.
• B)automatic stabilizers can be easily fine-tuned to move the economy to full employment.
• C)only the President is involved in implementing automatic stabilizers, instead of both the President and Congress.
• D)the Ricardian equivalence theorem applies more readily to automatic stabilizers than to discretionary fiscal policy.

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Definitions:

Debt Ratio

A financial ratio that measures the proportion of a company's assets that are financed by debt.

Assets

Economic resources owned or controlled by an individual or entity that are expected to produce value or benefit in the future.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest

The charge for borrowing money or the return on invested capital, typically expressed as an annual percentage rate.