Automatic Fiscal Stabilizers ________ the Impact of Demand or Supply

question 89

Multiple Choice

Automatic fiscal stabilizers ________ the impact of demand or supply shocks on the economy since government's net tax revenues ________ during booms and ________ during recessions.

• A)magnify; increase; decrease
• B)magnify; decrease; increase
• C)dampen; increase; decrease
• D)dampen; decrease; increase
• E)does not affect; are constant; are constant

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Definitions:

Principal-Agent Relationship

A situation in which one party (the principal) grants another party (the agent) the authority to act on their behalf, often subject to a contract.

Shareholders

Individuals or institutions that own shares in a corporation, giving them a stake in the company's ownership and profits.

Adverse Selection Problem

A situation where asymmetric information leads to the selection of poor-quality goods or candidates, as the chooser lacks information to make an optimal decision.

Incompetent

Lacking the necessary skills, qualities, or ability to effectively perform a specific job or task.