As a Result of the Action of Automatic Stabilizers

question 202

Multiple Choice

As a result of the action of automatic stabilizers,

• A)the government budget changes offset changes in national income.
• B)the government has had decreasing budget deficits over time.
• C)taxes and government spending rise when the economy enters a recession.
• D)taxes and government spending fall when the economy enters a recession.

---

Definitions:

Uncertainty

Refers to the degree of unpredictability or the lack of certainty about the future, often affecting decision-making in finance and economics.

Random Fluctuations

Unpredictable changes or variations that can affect statistical data and outcomes.

Cash Flows

The generation and use of cash by a business during a defined period of time, instrumental for assessing the company's liquidity, solvency, and financial flexibility.

Carrying Costs

Expenses associated with holding or storing inventory, including insurance, storage, and loss through obsolescence.