• During a recession, automatic stabilizers cause the federal budget deficit to:

A) decrease.
B) either increase or decrease.
C) remain unchanged.
D) increase.

• Critics of a balanced-budget amendment believe that a balanced budget would not allow the government enough flexibility to:

A) get the economy out of recessions.
B) raise wages for civil servants.
C) fight inflation.
D) spend budget surpluses.

• If the Fed enhances its credibility when it sets its own inflation targets:

A) long term interest rates will be more responsive to changes in the short term interest rates.
B) long term interest rates will be less responsive to changes in the short term interest rates.
C) short term interest rates will be more responsive to changes in the long term interest rates.
D) short term interest rates will be less responsive to changes in the long term interest rates.