Question

which of the following is an example of an automatic stabilizer? a. The reduction in the...

which of the following is an example of an automatic stabilizer?

a. The reduction in the money supply that occurs as banks become less willing to make loans during a recession

b. The fall in unemployment benefits that occurs as a result of growth in real GDP

c. The increase in government spending that occurs as a result of new spending bills passed by Congress

d. The reduction in real wages that occurs as the economy goes into a recession

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Automatic stabilizers offset fluctuations in economic activity without any direct intervention from the part of policymakers. Here the fall in unemployment benefits that occurs as a result of growth in real GDP is an example of automatic stabilizer as when real GDP is increasing there is more employment and as a unemployment benefits given will automatically reduce. All other examples shows intervention into the economy and hence is not an automatic stabilizer. Hence the answer is option (b)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Please read the following four examples below. Please identify what they are (i.e., discretionary fiscal policy,...
Please read the following four examples below. Please identify what they are (i.e., discretionary fiscal policy, monetary policy, or automatic stabilizer) and explain why.   a) A terrible recession occurs as a result of a bubble in the housing market bursting, and government-funded unemployment compensation is paid out to laid-off workers. (5 points) b) As the economy heats up, the resulting increase in equilibrium GDP results in higher income tax payments, which dampen consumption spending somewhat. (5 points) c) To stem...
Econ1A Macroeconomics Please read the following four examples below. Please identify what they are (i.e., discretionary...
Econ1A Macroeconomics Please read the following four examples below. Please identify what they are (i.e., discretionary fiscal policy, monetary policy, or automatic stabilizer) and explain why.   a) A terrible recession occurs as a result of a bubble in the housing market bursting, and government-funded unemployment compensation is paid out to laid-off workers. (5 points) b) As the economy heats up, the resulting increase in equilibrium GDP results in higher income tax payments, which dampen consumption spending somewhat. (5 points) c)...
1) Which of the following is an example of a bank diversification? Select the correct answer...
1) Which of the following is an example of a bank diversification? Select the correct answer below: a) a bank specializes in extending auto loans b) a bank holds only mortgages when the housing market is booming c) a bank will not extend loans to borrowers with subprime credit d) a bank holds equal amounts of mortgages, small business loans, and car loans. 2) According to the neoclassical economic model, the economy self-adjusts to clear a recessionary gap through Select...
1. A. A major recession is looming. Turning to discretionary fiscal policy, Congress might vote to...
1. A. A major recession is looming. Turning to discretionary fiscal policy, Congress might vote to __________(what?)________________? B. The economy is at very low unemployment rates and inflation rates are increasing. Turning to discretionary fiscal policy, Congress might vote to _____________(what?)___________________. 2. If Government Spending increases by $100 B and we're operating on the flat ("Keynesian") range of Aggregate Supply, will real GDP increase by (a) less than $100B, (b) $100 B, or (c) more than $100 B? (a multiple...
1- Which of the following is an example of a fiscal policy action to fight recession?...
1- Which of the following is an example of a fiscal policy action to fight recession? Select one: a. decreasing the discount rate b. decreasing government spending c. decreasing taxes d. Federal Reserve buying government securities in the open market 2- 2005 Real Gross Domestic Product (GDP) is the same as Select one: a. 2005 GDP adjusted for changes in the price level. b. 2005 GDP adjusted for depreciation. c. 2005 nominal (current dollar) GDP. d. 2005 GDP at 2005...
If the economy is full employment, an increase in aggregate demand will most likely lead to:...
If the economy is full employment, an increase in aggregate demand will most likely lead to: a reduction in the general level of prices an increase in unemployment an increase in real output, but not in prices an increase in prices, but not in real output. In order to reduce the rate of inflation in a rapidly growing, full-employment economy, it would be appropriate for the Federal Reserve to Increase income tax rates Sell government bonds Reduce reserve requirements Print...
Which of the following is likely to occur when the economy goes into a recession? A...
Which of the following is likely to occur when the economy goes into a recession? A general increase in deficit spending A general decrease in the national debt A general reduction in deficit spending A general increase in the interest rate level If the marginal propensity to consume is 0.9, then the government spending multiplier is: 10. 9. 0.1. 1.11. At the present moment, which of the following percentages is closest to the actual gross debt to GDP ratio for...
1. A cut in government spending, a decrease in income abroad, an increase in taxes, or...
1. A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future consumer income will fall will all cause aggregate: A) demand to shift rightward. B)demand to shift leftward. C)supply to shift rightward. D)supply to shift leftward. E) supply and aggregate demand to both shift equally inward. 2. A decrease in aggregate supply can result in: A) Unemployment B) demand- pull inflation C) prosperity D) cost- push inflation E) a recession 3.A...
1) Which of the following is not an example of the domestic expenditure multiplier concept? Select...
1) Which of the following is not an example of the domestic expenditure multiplier concept? Select the correct answer below: a) Len helps his friend move to a new home b) Lisa goes on vacation in Italy c) Rose buys a new purse for $100 at a retailer. The retailer uses its revenues to pay wages to its workers. d) Jane watches her little brother while her parents are at work 2) What effect would higher domestic price levels have...
Which of the following factors did not contribute to Canada’s period of stagflation in the 1970’s?...
Which of the following factors did not contribute to Canada’s period of stagflation in the 1970’s? Increases in global oil prices Devaluation of the Canadian dollar Higher wages for Canadian labour Government deregulation in the energy industry Which of the following fiscal policy stabilizers is automatic? An increase in education spending to help with textbook shortage A decrease in property taxes for seniors Employment insurance premiums All are examples of automatic stabilizers Which of the following is not a lag...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT