When automatic fiscal stabilizers are in place, a shock that causes a fall in the level of economic activity automatically
a. results in a decline in the federal budget deficit that lessens the fall in income.
b. results in a rise in the federal deficit that lessens the fall in income.
c. requires the federal government to balance the budget.
d. will lead to a permanent increase in the budget deficit.
e. both a and b
B
You might also like to view...
Reduction in the quality of agricultural land through overuse is called
a. degradation b. deforestation c. desertification d. defenestration. e. none of the above
The bonus of a plant manager in a vertically integrated firm is based on the following formula:
Bonus = 10,000 - 0.5(Qf - Q) where Qf is feasible production and Q is actual production. The value for Qf is provided by the plant manager at the beginning of the year. With this scheme, the plant manager has an incentive: A) to underestimate Qf. B) to overestimate Qf. C) to reveal the true Qf and make Q as small as possible. D) to reveal the true Qf and make Q as large as possible.