An Automatic Stabilizer

question 113

Multiple Choice

An automatic stabilizer:

• A)increases inflationary pressure during expansions.
• B)Increases the drop in disposable income during recessions and increases the jump in disposable income during expansions.
• C)reduces the drop in disposable income during recessions and reduces the jump in disposable income during expansions.
• D)increases tax revenue relative to government spending throughout the business cycle.
• E)decreases tax revenue relative to government spending throughout the business cycle.

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Definitions:

Exchange Rate

An exchange rate is the value of one currency for the purpose of conversion to another currency.

Rupees

The official currency of India, also used as currency in other South Asian countries, identifiable by the symbol ₹.

Appreciated

In finance, refers to an increase in the value of an asset over time.

Foreign Assets

Assets such as securities, currencies, and commodities held by a country or individual in foreign countries.