The Effectiveness of Automatic Stabilizers Is Limited by the Fact

question 325

Multiple Choice

The effectiveness of automatic stabilizers is limited by the fact that

• A)Congress usually acts slowly in legislating changes in tax rates.
• B)The stabilizers tend to raise the average price level regardless of the phase of the business cycle.
• C)The offset that the stabilizers provide to a change in private spending is less than the change in private spending.
• D)Transfer payments and subsidies increase during inflation and decrease during recessions.
• E)The stabilizers produce budget surpluses during recessions.

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