Unemployment insurance and the progressive income tax are two examples of automatic stabilizers
Indicate whether the statement is true or false
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Economics
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An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model,
A) the price level will increase, but real GDP will not change. B) the price level and real GDP will increase at the same time. C) the price level will increase, but real GDP will decrease. D) the price level will rise first, then real GDP will increase.
Economics
A firm uses an efficiency wage scheme to deter workers from shirking, which is detected 10% of the times. Suppose a risk-neutral worker. The industry ongoing wage is $3,000. The efficiency wage paid by this firm is $8,000. What is this worker's reservation wage?
A) $400 B) $500 C) $1,000 D) $1,500
Economics