As the economy expands, tax revenues
A. rise and transfer payments rise, causing the economy to expand by more than it would in the absence of automatic stabilizers.
B. fall and transfer payments rise, causing the economy to expand by less than it would in the absence of automatic stabilizers.
C. rise and transfer payments fall, causing the economy to expand by less than it would in the absence of automatic stabilizers.
D. fall and transfer payments fall, causing the economy to expand by more than it would in the absence of automatic stabilizers.
Answer: C
You might also like to view...
Explain how the market for gasoline would react to this price ceiling if the oil-producing nations increased production and drove the equilibrium price of gasoline to $2.50 a gallon. Would the U.S. gasoline market be effi-cient?
What will be an ideal response?
A downward shift in the consumption function can be caused by:
a. expectations of higher inflation. b. an increase in wealth. c. a lower price level. d. none of these.