What are automatic stabilizers and how do they affect the economy? Which is the most important?
Automatic stabilizers are changes in government transfer payments or tax collections that happen automatically and whose effects vary inversely with business cycles. The tax system is the most important automatic stabilizer. Other automatic stabilizers are unemployment compensation and welfare payments.
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Refer to Figure 26-5. In the figure above, the movement from point A to point B in the money market would be caused by
A) an open market sale of Treasury securities by the Federal Reserve. B) an increase in the price level. C) a decrease in real GDP. D) an increase in the required reserve ratio by the Federal Reserve.
The Herfindahl-Hirschman (HH) Index is used to
A) measure the degree of nonprice competition. B) measure the degree of market concentration in an industry. C) measure the extent of price leadership. D) None of the above