Discuss how a market reaches equilibrium. How is it expressed graphically?
Equilibrium exists at that one price in a market where the quantity demanded equals the quantity supplied. This is shown graphically at the point of intersection between demand and supply curves. At any price above equilibrium, a surplus is observed, which pushes the price down until equilibrium is established. Any price below equilibrium creates a shortage and the price rises until the shortage is eliminated.
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Automatic stabilizers create ________ during recessions from increased government spending on welfare and unemployment insurance, and reduced tax revenues, and create _________ during peak growth periods of the economy from reduced government welfare spending and increased tax revenues
a. fiscal stimulus, fiscal contraction b. fiscal stimulus, fiscal stimulus c. fiscal contraction, fiscal stimulus d. fiscal contraction, fiscal contraction
A Gini coefficient based on population deciles tends to be lower than a Gini coefficient based on income
Indicate whether the statement is true or false