During a Recession, Total Public Assistance Payments and Unemployment Compensation

question 44

Multiple Choice

During a recession, total public assistance payments and unemployment compensation payments automatically increase while income taxes automatically decrease. Which of the following best describes the effect of these changes on aggregate demand?

• A)​Aggregate demand will be less than it would be without these automatic stabilizers.
• B)​Aggregate demand will be the same as it was before the recession.
• C)​Aggregate demand will be more than it would be without these automatic stabilizers.
• D)​Aggregate demand will be greater than it was before the recession.

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Definitions:

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by all parties involved to be enforceable.

Improvements

Enhancements made to a property or goods that increase their value or utility.

Standard Construction Rule

A theory of legal interpretation under which the court will determine the principal objective of the parties in the making of the contract.

Principal Objective

The main goal that the parties to a contract hoped to meet by entering the contract in the first place.