Which of the Following Is True About Automatic Stabilizers

question 72

Multiple Choice

Which of the following is true about automatic stabilizers?

• A)Automatic stabilizers are a part of discretionary fiscal policy.
• B)The federal funds rate is an example of an automatic stabilizer.
• C)An automatic stabilizer is any program that responds to fluctuations in the business cycle in a way that moderates the effects of those fluctuations.
• D)Any kind of trade policy adopted by the government will be considered as an automatic stabilizer.
• E)When income rises, automatic stabilizers increase/boost spending.

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Definitions:

Idle Production Capacity

Occurs when the service provider is available but there is no demand for the service.

Demand Exceeds

A situation where the demand for a product or service surpasses its supply, often leading to stock shortages or increased prices.

No Demand

A market situation where there is no consumer desire or interest in purchasing a specific product or service.

Inconsistency

The state of being inconsistent; lack of uniformity or steadiness in actions, values, or outcomes.