Question

12. The progressive income tax and transfer payments are the two main: A) automatic stabilizers. B) monetary policy tools. C) long-run aggregate supply management tools. D) tools for balancing the budget. 13. Automatic stabilizers include all of the following EXCEPT: A) unemployment compensation benefits. B) welfare payments. C) national defense spending. D) tax revenues. 14. The implementation lag is: A) usually less than 12 months. B) the time it takes policymakers to recognize a problem. C) the time it takes for a fiscal policy change to influence the economy. D) the shortest of the three fiscal policy lags. and transfer payments 15. As GDP increases, tax revenues A) decline; decline B) decline; increase increase; decline increase; increase 16. Which factor is primarily responsible for the fact that the U.S. debt is relatively manageable? A) high interest rates B) long-term bonds C) low interest rates D) short-term bonds 17. The notion of functional finance says that: A) the economic function of the president is to maintain a balanced budget. B) the government should not focus on any deficits or surpluses caused by the budget and focus on maintaining the economy at full employment. the government should function as a financial leader in the economy. D) the government's budget should always be balanced over the course of the business cycle.

Answer 1

12. The correct answer is 'Option A'.

Automatic stabilizers are the government policies that automatically adjust the transfer incomes and tax rates in order to stabilize the income, spending and consumption during a period of time. The progressive income tax and the transfer payments are the two main automatic stabilizers.