Which of the following is an example of an automatic stabilizer? Question 11 opt

Question

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

Question 11 options:

a)

b)

c)

d)

Evidence has suggested that borrowing is _____ than taxation by politicians to finance fiscal policy spending, which has led to a(n) _____ of the federal government over the last few decades.

Question 12 options:

a)

b)

c)

d)

If a government collects $550 billion in taxes and spends $700 billion, it would have a:

Question 13 options:

a)

b)

c)

d)

The portion of the national debt that is not held by the Federal Reserve and government agencies include:

Question 14 options:

a)

b)

c)

d)

Reducing government spending, reducing transfer payments, or raising taxes describes which policy?

Question 15 options:

a)

b)

c)

d)

a)

unemployed workers claiming unemployment benefits during a recession

b)

business laying off workers during a recession

c)

consumers spending more when the economy is strong

d)

the government raising interest rates to reduce inflatio

Explanation / Answer

11. a) unemployed workers claiming unemployment benefits during a recession

Automatic stabilizers refers to any government program that tends to reduce fluctuations in GDP automatically.

12. a) more favored; expansion

Borrowing is more preferred to taxation which leads to increase in money supply and causes expansion.

13. Government expenditure is more than its revenue so their is deficit.

Deficit = Government expenditure - Government revenue = 700 billion - 550 billion = $ 150 billion

14. d) only the externally held debt

15. b) Contractionary fiscal policy

Government decreases its spending and increase taxes when it wants to decrease flow of money in the economy. Policy related to government spending and taxation is considered as fiscal policy.

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