Which of the Following Is an Example of an Automatic

question 148

Multiple Choice

Which of the following is an example of an automatic stabilizer?

• A)The reduction in the money supply that occurs as banks become less willing to make loans during a recession
• B)The reduction in real wages that occurs as the economy goes into a recession
• C)The increase in government spending that occurs as the result of new spending bills passed by Congress
• D)The rise in tax revenue that occurs as a result of growth in real GDP
• E)All of the choices are examples of an automatic stabilizer.

Differentiate between changes in quantity supplied and changes in supply.

Recognize the impact of substitutes' price changes on supply decisions.

Discern the influence of production costs on supply.

Define the law of supply and its implications.

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Definitions:

Carrying Amount

The value at which an asset is recognized on the balance sheet after deducting accumulated depreciation or amortization.

Investment Account

A financial account held at a financial institution that is used for the purpose of holding and managing investments such as stocks, bonds, mutual funds, and other assets.

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence over that company but does not fully control it.

Investment Account

An account held at a financial institution that is used to buy and hold investment assets, such as stocks, bonds, and mutual funds.