A fall in income that results in a decrease in tax revenues is an example of .
A) a recession
B) automatic fiscal policy
C) discretionary fiscal policy
D) needs-tested tax programs

Question

Quizplus · Accepted Answer

Automatic fiscal policy refers to changes in government expenditure and tax revenues that occur automatically without the need for explicit government action. A decrease in tax revenues due to a fall in income is an example of automatic fiscal policy as it leads to a decrease in government revenue and may result in reduced government spending.

A Fall in Income That Results in a Decrease in Tax