Which Statement Is True About Automatic Stabilizers

question 262

Multiple Choice

Which statement is true about automatic stabilizers?

• A)They have eliminated the business cycle.
• B)They have helped smooth out the business cycle.
• C)They have been completely ineffective.
• D)None of the statements are true of automatic stabilizers.

Identify autonomous and induced consumption and their roles in the economy.

Evaluate the impact of changes in disposable income on consumption and saving behaviors.

Analyze the significance of dissaving and its implications.

Understand the importance of saving rates in the economy and factors affecting them.

---

Definitions:

Foreign Assets

Assets such as stocks, bonds, real estate, or businesses that are located in countries outside the investor's home country.

Foreign Price Level

A measure of the average prices of goods and services in a country relative to those in other countries, affecting exchange rates and purchasing power.

Real Exchange Rate

The rate at which a person can exchange the currency of one country for the currency of another and obtain the same quantity of goods.

Purchasing-power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess relative currency value and living standards.