Automatic stabilizers stabilize the level of real GDP because:
A. Congress quickly passes laws that change spending and tax revenue.
B. federal expenditures and tax revenues change as the level of real GDP changes.
C. the spending and tax multiplier are constant.
D. wages are controlled by the minimum wage law.
Answer: B
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How could the existence of an unemployment insurance system or other transfer programs have reduced the severity of the Great Depression?
What will be an ideal response?
The IS curve becomes steeper when
A) government spending is relatively small. B) the income tax rate in the current period is relatively small. C) current changes in the real interest rate cause large changes in current real output. D) changes in the current real interest rate cause small changes in current demand. E) none of the above