When the Economy Begins to Slip into a Recession,the Automatic

question 229

Multiple Choice

When the economy begins to slip into a recession,the automatic stabilizers cause

• A)transfer payments to increase and tax collections to decline.
• B)tax rates to increase so that tax revenues will remain relatively stable.
• C)interest rates to decline.
• D)a movement toward a budget surplus.
• E)the budget deficit to get smaller.

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Definitions:

Gross Private Domestic Investment

The total amount of domestic capital investment in non-governmental sectors, including both non-residential and residential assets.

Producer Plant

Typically refers to a facility or set of facilities that processes raw materials or components to manufacture goods or products for sale. In some contexts, it might specifically denote a facility involved in agricultural production.

Residential Construction

The building and selling of residential buildings such as houses, apartments, and condominiums.

Capacity Utilization Rate

The percentage of a firm's total possible production output that is actually being achieved, indicating how efficiently resources are being used.