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:

Resource Allocation

The process of distributing available resources among various projects or business units.

Monopolistic Competition

A market framework where numerous sellers present unique products, granting them a certain level of influence over the market.

Allocative Efficiency

A state of resource allocation where it is not possible to make someone better off without making someone else worse off.

Productive Efficiency

A situation where an economy or firm produces goods at the lowest possible cost, utilizing all its resources efficiently without waste.