Indicate whether each of the following is an example of an automatic stabilizer or discretionary fiscal policy.

1. the government increases the top income tax bracket to 35%.
2. the tax rate paid by an individual falls from 20% to 15% when his pay is reduced during a recession.
3. a person qualifies for unemployment compensation when she loses her job during a recession.
4. the government votes to increase military spending.
5. the government collects more tax revenue during an expansion because the stock market is booming.

Rate of return douglas keel, a financial analyst for orange industries, wishes to estimate the rate of return for two similar-risk investments, x and y. douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. a year earlier, investment x had a market value of $27 comma 000; and investment y had a market value of $46 comma 000. during the year, investment x generated cash flow of $2 comma 025 and investment y generated cash flow of $ 6 comma 770. the current market values of investments x and y are $28 comma 582 and $46 comma 000, respectively. a. calculate the expected rate of return on investments x and y using the most recent year's data. b. assuming that the two investments are equally risky, which one should douglas recommend? why?