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Income Taxes in Australia Are Part of Automatic Fiscal Policy

Question 79

Multiple Choice

Income taxes in Australia are part of automatic fiscal policy because


A) tax revenues decrease when income increases, intensifying the increase in aggregate demand.
B) the government can increase tax rates whenever the government deems such a policy appropriate.
C) tax rates can be adjusted by the Parliament to counteract economic fluctuations.
D) tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand.

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