Explain automatic stabilizer and spending multiplier

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Reference no: EM13174511

1)Which of the following is the best example of an automatic stabilizer?

A) Welfare Payments

B) Foreign aid

C) Defense Spending

D) Highway construction

2)Unemployment compensation is an example of a (an):

A) discretionary stabilizer

B) countercyclical stabilizer

D) procyclical stabilizer

E) seasonal stabilizer

F) automatic stabilizer

3)The school of economic thought which argues that through tax reductions, and deregulation, government creates the proper incentives for the private sector to increase aggregate supply is known as the:

A) rational expectations school.

B) neo-keynesian school

C) supply-side school

D) new classical school

E) classical school

4) As the marginal propensity to consume (MPC) increases, the spending multiplier:

A) increases

B) decreases

C) remains constant

D) becomes undefinable Economics

Reference no: EM13174511

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