An automatic stabilizer:
a. increases inflationary pressure during expansions
b. Increases the drop in disposable income during recessions and increases the jump in disposable income during expansions.
c. reduces the drop in disposable income during recessions and reduces the jump in disposable income during expansions.
d. increases tax revenue relative to government spending throughout the business cycle.
e. decreases tax revenue relative to government spending throughout the business cycle.
c
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The costs of inflation that arise from trying to reduce cash holdings are known as
A) diminishing costs. B) menu costs. C) chain-index costs. D) shoe leather costs.
Refer to Figure 10-5. "Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above
A) C to A B) A to B C) B to A D) B to C