Average: /4 Attempts: 4. Automatic, or built-in, stabilizers Which of the follow

Question

Average: /4 Attempts: 4. Automatic, or built-in, stabilizers Which of the following are examples of automatic stabilizers? Check all that apply Aa Aa In 1968, Congress enacted a temporary 10% increase in personal income tax rates in response to an inflationary GDP gap. As poverty rates rise during a recession, more people qualify for welfare, and welfare payments increase. In response to the 2008 recession, Congress approved billions of dollars of additional spending on public infrastructure projects. As people earn higher incomes during an expansion, the progressive tax system requires them to pay higher average tax rates

Explanation / Answer

B & D

The increased poverty rate will automatically decline during recovery or boom. Likewise, the tax revenue will decline when the economy will fall into recession.

Buy the increased taxrate will not fall automatically neither does the public expenditure.

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