National Income and Price Determination
When considering positive externalities related to education, what kind of government policies would likely increase social welfare?
Subsidizing tuition fees or offering student grants
Decreasing public funding for schools
Imposing a tax on educational supplies
Eliminating requirements for basic education
How do unemployment benefits act as an automatic stabilizer during a recession?
They provide tax breaks to businesses to discourage layoffs.
They reduce interest rates to stimulate borrowing and investment.
They increase government spending automatically when unemployment rises.
They encourage workers to save more money during economic downturns.
Which of the following automatically decreases when the economy enters a recession?
Interest rates
Government subsidies
Export levels
Tax revenues
What is the purpose of automatic stabilizers in the economy?
To offset fluctuations in economic activity and stabilize the economy
To eliminate budget deficits during recessions
To increase government spending in times of economic boom
To prevent inflation from occurring
How do progressive tax systems act as automatic stabilizers within an economy experiencing fluctuating levels of real GDP?
They offer subsidies to businesses that correspond with the level of real GDP growth or decline.
They impose higher taxes on imports to adjust trade balances according to GDP changes.
They naturally increase tax revenues during expansions and decrease them during recessions, moderating economic fluctuations.
They fix tax rates regardless of GDP changes, providing consistency for long-term economic planning.
During a recession, how do automatic stabilizers affect government finances?
They contribute to budget deficits
They have no impact on government finances
They reduce the need for government spending
They lead to budget surpluses
What happens to government spending on welfare programs during a recession as a result of automatic stabilizers?
It increases.
It remains constant by law.
It fluctuates daily based on stock market performance.
It decreases significantly.

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How might a government address underconsumption of vaccines which are considered a public good?
Privatizing vaccine production entirely
Increasing patent protections on pharmaceuticals
Offering vaccinations free-of-cost or subsidized prices
Placing tariffs on imported medicines
How do progressive taxes act as automatic stabilizers during a recession?
They reduce the tax burden on individuals as their incomes fall.
They increase government revenue to fund additional spending directly.
They encourage businesses to invest more due to higher after-tax profits.
They allow for greater borrowing by reducing interest rates on loans automatically.
How do automatic stabilizers help maintain stable economic growth?
By reducing the role of the private sector
By offsetting extreme movements in the business cycle
By promoting income inequality and wealth concentration
By increasing government intervention in the economy