An Example of an Automatic Stabilizer Is

question 221

Multiple Choice

An example of an automatic stabilizer is

• A) the progressive tax system.
• B) the decision of the President to cut taxes in a recession.
• C) the Congressional decision to increase unemployment benefits in a recession.
• D) the raising of taxes on cigarettes to discourage smoking to stabilize health-care costs.

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Definitions:

Pure Competition

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit, leading to price-taking behavior.

Pure Monopoly

A market scenario in which one company monopolizes the entire market for a specific product or service, lacking any significant alternatives.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets.

Market Segmentation

The process of dividing a broad market into distinct subsets of consumers with common needs or characteristics, allowing for targeted marketing strategies.