Automatic Stabilizers

question 15

Multiple Choice

Automatic stabilizers:

• A) require congressional action before each time that they are put into effect.
• B) have no outside lag.
• C) have no inside lag.
• D) have long and variable inside lags.

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Definitions:

Zero Coupon Interest Rate

A rate of interest reflecting the discount from par at which zero-coupon bonds are sold. This rate is not paid annually but at maturity.

Arbitrage Profit

Profit earned from buying and selling the same asset in different markets to take advantage of differing prices for the same asset.

Stock Index

A measurement of a section of the stock market calculated from the prices of selected stocks, representing a specific market or sector.

Futures Contracts

Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.