The Presence of Automatic Stabilizers Means That the Federal Deficit

question 28

Multiple Choice

The presence of automatic stabilizers means that the federal deficit is ________ than it otherwise would be in a recession and ________ than it otherwise would be in an expansion.

• A) larger; smaller
• B) smaller; larger
• C) smaller; smaller
• D) larger; larger

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not included in cash equivalents.

Bonds Payable

Long-term liabilities representing money borrowed by an entity that must be repaid to creditors at a future date.

Financing Activities

Transactions related to raising capital, repaying investors, and restructuring the financial basis of the entity in the statement of cash flows.

Treasury Stock

Stock that a corporation has once issued and then reacquires.