A new member of Congress notes that "[p]ersonal income tax collections automatically fall and transfers and subsidies automatically rise as national income declines." This observation best describes how the personal income tax, transfers, and subsidies:
A. produce the cyclically adjusted budget.
B. cause crowding out and reduce equilibrium GDP.
C. contribute to the recognition lag with fiscal policy.
D. serve as built-in stabilizers.
Answer: D
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An upward-sloping supply curve suggests that producers
A) sell less at higher prices. B) sell more at lower prices. C) plan to sell more at a given, higher price. D) ignore marginal costs of production, and only focus on the demand for their product.
A graph shows that as fees to use ATM machines increase, people use them less frequently. The graph of this relationship would show
A) an inverse relationship. B) a negative relationship. C) a direct relationship. D) Both answers A and B are correct.
A key assumption of the public choice model is that government policymakers will pursue their own self-interests
Economists assume that consumers and firms pursue their own self-interests when they interact in competitive markets and this interaction results in efficient economic outcomes. Does the pursuit of self-interest by policymakers result in efficient economic outcomes?
Changes in the federal tax structure have a significant effect on state income tax collections because most states base their tax structure on the federal tax structure
a. True b. False