Statement I: the Workings of the Automatic Stabilizers Are Part

question 17

Multiple Choice

Statement I: The workings of the automatic stabilizers are part of discretionary fiscal policy.
Statement II: Countercyclical discretionary fiscal policy calls for deficits during recessions and surpluses during inflationary booms.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Citizen Apathy

A situation where individuals in a society do not show interest or concern for the political, social, or cultural life of their community.

Massive Deficits

Significantly large shortfalls where government expenditures exceed revenue.

Surpluses

Situations in which the quantity of a product or service supplied exceeds the quantity demanded, or when revenues exceed expenditures in a budget.

Tax Expenditures

Governmental financial benefits conferred through tax policies, allowing individuals or corporations to reduce their tax liabilities through deductions, exemptions, or credits.