What are the automatic stabilizers the United States has in place, and how do they function differently from discretionary fiscal policy?
What will be an ideal response?
Automatic stabilizers are provisions of the tax law that cause changes in government spending or taxes without the action of Congress or the President. The progressive income tax takes more money out of the hands of people during inflationary times and less during recessions. Unemployment compensation gives spending power to people even when they are not working due to a recession. The key difference is that automatic stabilizers work without the lags associated with discretionary fiscal policy.
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How will a recession in the economies of our foreign trading partners affect US AD?
A. no effect on AD B. AD will increase C. AD will decrease D. depends on whether US offers financial aid to these countries
A common theme in the discussions of the airline, soft drink, doughnut, and express delivery industries is that oligopolistic firms tend to compete:
A) strictly on the basis of price and nothing else. B) strictly on the basis of cost minimization. C) primarily on the basis of product differentiation and price. D) primarily by erecting barriers into the market.