Automatic Stabilizers Decrease the Impact of a Recession on the Level

question 91

Multiple Choice

Automatic stabilizers decrease the impact of a recession on the level of economic activity because they

• A)reduce the interest rate and so allow firms to increase their level of investment.
• B)increase taxes so the budget is always balanced.
• C)raise the exchange rate so U.S.exports become more attractive to foreigners.
• D)mean disposable income does not change by as much as real GDP.
• E)increase the quantity of money in circulation.

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Definitions:

Pollution

The addition of pollutants to the natural surroundings, leading to harmful alterations.

Environmental Standard

Regulations and criteria set by authorities aimed at minimizing the environmental impact of various activities, such as emissions levels and waste management protocols.

Quantity of Pollution

The measurable amount of pollutants or contaminants released into the environment, often subject to regulatory limits.

Marginal Social Cost

Marginal social cost is the total cost to society of producing one additional unit of a good, including both private costs and any externalities.