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An Increased Federal Budget Surplus During an Expansion Serves as an Automatic

Question 23

Multiple Choice

An increased federal budget surplus during an expansion serves as an automatic economic stabilizer for all of the following reasons except:


A) higher personal income translates into a higher tax load and so consumption spending is slightly curbed.
B) higher corporate profits translate into a higher tax load and so investment spending is slightly curbed.
C) the positive government saving stimulates consumption spending.
D) reduced transfer payments from welfare programs partly offset the overall increase in household income.

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