Automatic Stabilizers Operate in Which of the Following Ways

question 25

Multiple Choice

Automatic stabilizers operate in which of the following ways?

• A)An annually balanced budget will automatically tend to offset the destabilizing effects created by provincial and territorial governments and, thereby, stabilizes the economy.
• B)With given tax rates and government spending policies, a rise in GDP will tend to produce a budget surplus, while a decline will tend to result in a deficit.
• C)Parliament will automatically change the tax structure and spending programs to correct upswings and downturns in business activity.
• D)Government purchases and tax receipts automatically balance over the course of the business cycle, though they may be out of balance in any single year.
• E)Tax rates are automatically increased during recessions and decreased during inflationary periods

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Definitions:

Foreign Producers

Companies or individuals that manufacture or provide services in one country for consumption in another country.

Domestic Producers

Local or national firms and individuals that produce goods and services within a country.

Free Trade

The absence of tariffs, duties, or trade barriers between countries, allowing for the unrestricted exchange of goods and services.

Sold Quantity

The total number of units of a product sold within a specific time period.