If the Economy Has Automatic Stabilizers Built In, the Multiplier

question 77

Multiple Choice

If the economy has automatic stabilizers built in, the multiplier will

• A) be smaller than it would have been in the absence of automatic stabilizers.
• B) be larger than it would have been in the absence of automatic stabilizers.
• C) be zero.
• D) be infinitely larger than it would have been in the absence of automatic stabilizers.

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Definitions:

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Stock Price

The current price at which a particular stock is bought or sold in the market.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security.

Time Value

The concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.