Asked by Ishaan Backliwal on Jul 20, 2024
Verified
Statement I: In the 1930s,the federal government built a few automatic stabilizers into the economy.
Statement II: Automatic stabilizers protect the economy from the extremes of the business cycle.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Automatic Stabilizers
Economic policies and programs, such as unemployment insurance and progressive taxes, that automatically adjust to stabilize economic fluctuations.
Business Cycle
The natural rise and fall of economic growth over time, characterized by periods of expansion, peak, contraction, and trough.
Federal Government
The national government of a federal country, where powers are divided between central authority and constituent political units, such as states or provinces.
- Identify the function of automatic stabilizers in alleviating the impact of economic fluctuations.
Verified Answer
RB
Reckaldo BurrellJul 22, 2024
Final Answer :
C
Explanation :
Statement I is true as the federal government did introduce some automatic stabilizers in the 1930s, such as unemployment insurance and progressive income taxes. Statement II is also true, as automatic stabilizers help to smooth out economic fluctuations, cushioning the economy from the extremes of the business cycle.
Learning Objectives
- Identify the function of automatic stabilizers in alleviating the impact of economic fluctuations.