An Example of an Automatic Stabilizer Is

question 323

Multiple Choice

An example of an automatic stabilizer is:

• A)tax receipts rising when GDP rises.
• B)a discretionary increase in taxes.
• C)government purchases of goods and services rising when GDP rises.
• D)government transfers rising when GDP rises.

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Definitions:

Warrant

A financial security that gives the holder the right to purchase the issuer's stock at a specified price before a specified expiry date.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy an asset at a specified price within a specified time period.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a set time period.

Fixed Price

A set price for a product or service that does not change under normal conditions.