Which of the following best describes the built-in stabilizers as they function in Canada?
A)The size of the balanced-budget multiplier varies inversely with the level of GDP.
B)Personal and corporate income tax collections automatically fall and transfers and subsidies automatically rise as GDP rises.
C)Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.
D)Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.

Question

Quizplus · Accepted Answer

Built-in stabilizers in Canada function such that as GDP rises, personal and corporate income tax collections automatically increase, while transfers and subsidies automatically decrease, helping to moderate economic fluctuations.

Which of the Following Best Describes the Built-In Stabilizers as They