When Output Deviates from Potential GDP, Automatic Stabilizers Work to Push

question 102

Multiple Choice

When output deviates from potential GDP, automatic stabilizers work to push the economy:

• A) in the same direction that correctly timed and formulated discretionary policy would.
• B) in the opposite direction that correctly timed and formulated discretionary policy would.
• C) in unpredictable ways, causing a need for discretionary policy.
• D) even further from its long-run equilibrium.

---

Definitions:

Ventilator

A machine designed to provide mechanical ventilation by moving breathable air into and out of the lungs.

Autobiography

An autobiography is a self-written account of the life of oneself, providing a personal insight into an individual's experiences.

Stress Hormones

Biochemical substances, such as cortisol, released in the body's response to stress, affecting both physical and psychological functions.

Immune System

The complex network of cells, tissues, and organs in a body that works to defend against pathogens and maintain overall health.