Author Question: What are automatic stabilizers and how do they affect the economy? Which is the most ... (Read 87 times)

TVarnum · **on:** Jun 30, 2018

What are automatic stabilizers and how do they affect the economy? Which is the most important?

Question 2

For a bank to have lending power, its required reserves must:
a. be smaller than its legal reserves.
b. exceed its legal reserves.
c. be smaller than its excess reserves.
d. exceed its excess reserves.
e. exceed its vault cash.

Sweetkitty24130 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Automatic stabilizers are changes in government transfer payments or tax collections that happen automatically and whose effects vary inversely with business cycles. The tax system is the most important automatic stabilizer. Other automatic stabilizers are unemployment compensation and welfare payments.

Answer to Question 2

a