The major advantage of automatic stabilizers is that they
a. guarantee the federal budget will be balanced in a relatively short amount of time.
b. institute countercyclical fiscal policy without the delays associated with legislative action.
c. automatically produce surpluses during recessions and deficits during expansions.
d. require discretionary actions on the part of Congress before they exert an impact on output and employment.
B
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With no Ricardo-Barro effect, a government budget surplus
A) decreases the demand for loanable funds and increases the real interest rate. B) increases the demand for loanable funds and lowers the real interest rate. C) increases the supply of loanable funds and lowers the real interest rate. D) increases the demand for loanable funds and raises the real interest rate. E) decreases the supply of loanable funds and lowers the real interest rate.
According to the mini-case on the Barbie Doll, Mattel is successful because
A) it has been selling Barbie dolls for a long time. B) the Barbie doll is the top import into the U.S. C) international trade allows them to produce a wide variety of doll types at many price points. D) there are low fixed costs for product design.