Which of the Following Statements Is Correct

question 102

Multiple Choice

Which of the following statements is correct?

• A)Built-in stability only partially offsets fluctuations in economic activity.
• B)Built-in stability works in halting inflation, but it cannot alleviate unemployment.
• C)Built-in stability can be relied on to eliminate completely any fluctuation in economic activity.
• D)Built-in stability overcorrects for fluctuations in economic activity; for example, it may change a small expansion into a recession.

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Definitions:

Prepaid Expenses

Costs paid for in advance of receiving the benefit of the service or product, such as insurance premiums or rent, which are recorded as assets until used.

Income Taxes Payable

The amount of income taxes a company or individual owes to the government, which has not yet been paid.

Statement Of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Cash Dividends

Payments made by a corporation to its shareholder members as a distribution of profits.