Which of the Following Statements Is Correct

question 115

Multiple Choice

Which of the following statements is correct?

• A)Built-in stability only partially offsets fluctuations in economic activity.
• B)Built-in stability works in halting inflation, but it cannot alleviate unemployment.
• C)Built-in stability can be relied on to eliminate completely any fluctuation in economic activity.
• D)Built-in stability has eliminated the need for discretionary fiscal policy.

---

Definitions:

Operating Income

Income from a company’s everyday business operations, calculated before taxes and interest.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a produced unit.

Unit Product Cost

The total cost, including materials, labor, and overhead, divided by the number of units produced.

Year 2

Refers to the second year of a time-related context or sequence, not a standalone key term without additional context.