Suppose the government never borrows, so that it always finances its expenditures with taxes. Suppose further that government spending does not depend on income. In this case:
A. neither government spending nor taxes are automatic stabilizers.
B. taxes are an automatic stabilizer but government spending is not.
C. government spending is an automatic stabilizer, but taxes are not.
D. both government spending and taxes are automatic stabilizers.
Answer: A
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