Fiscal Policies That Require No Government Action but That Are

question 222

Multiple Choice

Fiscal policies that require no government action but that are expansionary when the economy contracts and contractionary when the economy expands are known as:

• A)discretionary fiscal policy.
• B)automatic stabilizers.
• C)autonomous spending policies.
• D)destabilizing fiscal policies.

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Definitions:

Economies of Scale

Enterprises achieve cost benefits from their operation size, resulting in a reduction of cost per output unit as the scale expands.

Average Variable Cost

The total variable costs divided by the quantity of output produced; it fluctuates with production volume.

Line Segment AB

A part of a line that is bounded by two distinct end points, A and B, and contains every point on the line between A and B.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional item changes with increased production.