Which of the Following Explains Why Fluctuations in Real GDP

question 163

Multiple Choice

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?

• A)Services have become a smaller fraction of GDP since the 1950s.
• B)Unemployment insurance and other government transfer programs are more prevalent since the 1950s.
• C)The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
• D)both B and C

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Definitions:

Excess Burden

The cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Tax Revenue

The income that is collected by the government through various forms of taxation.

Excess Burden

The expense incurred by society due to market inefficiency, happening when there's a mismatch between supply and demand.

Tax Revenue

The earnings achieved by governments by levying taxes.