Refer to the above diagram wherein T is tax revenues and G is government expenditures.All figures are in billions.This diagram portrays the notion of:
A)regressive tax system.
B)built-in stability.
C)a balanced-budget.
D)discretionary fiscal policy.

Question

Refer to the above diagram wherein T is tax revenues and G is government expenditures.All figures are in billions.This diagram portrays the notion of:
A)regressive tax system. 
B)built-in stability. 
C)a balanced-budget. 
D)discretionary fiscal policy.

Quizplus · Accepted Answer

The diagram portrays built-in stability, which refers to the automatic stabilizers that occur when tax revenues increase and government expenditures decrease during an economic expansion or when tax revenues decrease and government expenditures increase during an economic contraction. This helps stabilize the economy without the need for discretionary fiscal policy.

Refer to the Above Diagram Wherein T Is Tax Revenues