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.

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Definitions:

OAS Benefits

Monthly payments provided by the government to eligible individuals who are 65 years of age or older, as part of the Old Age Security program in Canada.

Population Density

A measure of the number of individuals living in a unit area, usually per square kilometer or mile, indicating how crowded an area is.

Square Kilometres

A unit of area measurement equal to a square that is one kilometer on each side.

Canada's Land Area

The total surface area occupied by Canada, making it the second-largest country in the world by land area.