Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 24, Problem 6CQQ
To determine
Automatic stabilizers.
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Students have asked these similar questions
Which of the following is an example of an automatic stabilizer?
When the economy goes into a recession,…
a.More people become eligible for unemployment insurance benefits.
b.Stock prices decline, particularly for firms in cyclical industries.
c.Congress begins hearings about a possible stimulus package.
d.The Federal Reserve changes its target for the federal funds rate.
Reason why B, C, D are wrong?
Which of the following is NOT an automatic stabilizer? a. income taxes b. unemployment insurance c. Medicaid d. food stamps e. monetary policy
Briefly discuss how time lag could be an argument against policy activism. What is the role of automatic stabilizer in this context? Explain with examples
Chapter 24 Solutions
Essentials of Economics (MindTap Course List)
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Similar questions
- Which of the following is the best example of an automatic stabilizer? national defense expenditures discretionary fiscal policy the minimum wage O the unemployment compensation program.arrow_forwardWhich of the following is an example of an automatic stabilizer? tax rates the MPC the amount of dollars collected in taxes interest ratesarrow_forwardWhich of the following is not an automatic stabilizer. Pick a,b,c, or d A) Sales tax B)State retirement pension C) unemployment benefits D)income taxarrow_forward
- please answer the following question: 1. Automatic stabilizers:A) work without the need for decisions from Congress or the White House.B) require explicit actions each year by policy makers to become active.C) increase elections during recessions.D) increase aggregate demand during an economic boom.arrow_forwardWhich of the following are examples of automatic stabilizers? Check all that apply. Personal income taxes Corporate income taxes The discount ratearrow_forwardIf government policy makers were worried about the inflationary potential of the economy, which of the following would be a correct fiscal policy change?arrow_forward
- Which of the following illustrates the effectiveness lag? A.Policymakers implement contractionary fiscal policy but it will be a few months before it starts working. B.Policymakers believe an economic downturn has occurred, but they decide not to take action until they are sure. C.Policymakers first learn of the recession when it is five months old. D.Policymakers agree to increase taxes, but it will be at least two months before the policy is implemented.arrow_forwardIn preparing their estimates of the stimulus package's effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that the government purchases multiplier would be lower than the administration's estimate, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that the multiplier would be higher than the administration's estimate. when the unemployment rate is high; when the value of the dollar is depreciating against foreign currencies when the federal budget is in surplus; when government transfer payments are declining during wartime; when short-term interest rates are near zero during a recession; when the inflation rate is relatively lowarrow_forwardWhen the economy is in a recessionary mode, what will likely be the actions by government using fiscal policy? Is it better to concentrate on aggregate demand or aggregate supply? Why?arrow_forward
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