Because of the automatic stabilizers, a decline in the level of economic activity will cause:
A) a reduction in tax revenues collected.
B) a reduction in government expenditures.
C) a greater budget surplus.
D) Congress to vote for a tax cut.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment benefits and progressive income taxes, tend to increase government spending and decrease tax revenues during economic downturns. Thus, a decline in economic activity will lead to a reduction in tax revenues collected.

Because of the Automatic Stabilizers, a Decline in the Level