Because the personal income tax is an automatic stabilizer,
A. inflationary gaps are impossible.
B. the budget deficit grows during a recession.
C. the deficit needed to cure a recessionary gap increases.
D. the structural deficit grows during a recession.
E. all of the above are correct.
Answer: B
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When Homeowner Harry's sold his residence recently, he found that he had more than $20,000 in equity. This equity did NOT come from
A) the use of an interest-only mortgage payment plan. B) the principal portion of his PITI monthly mortgage payments. C) increases in market value of his house due to appreciation and inflation. D) his down payment.
The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
a. greater than one b. less than one c. one d. zero e. infinity