Automatic Stabilizers Have the Effect of

question 181

Multiple Choice

Automatic stabilizers have the effect of

• A) increasing aggregate demand during a recessionary gap.
• B) increasing aggregate demand during an inflationary gap.
• C) increasing long-run aggregate supply during a recessionary gap.
• D) increasing long-run aggregate supply during an inflationary gap.

---

Definitions:

Free Cash Flow

This is a financial performance measure that shows how much cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Management Bonuses

Additional compensation awarded to executives and managers, often tied to performance metrics such as company profitability or achievement of specific goals.

Bond Holders

Individuals or institutions that own bonds, which are debt securities issued by corporations or governments.

Investor Supplied Capital

Funds provided by investors to a company for the purpose of acquiring assets and funding operations.