As GDP decreases, tax revenues _____, which tend to partially _____ the initial decline in GDP.

Name: As GDP decreases, tax revenues _____, which tend to partially _____ the initial decline in GDP.
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Question

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When GDP decreases, tax revenues also decrease, which can exacerbate the initial decline. However, tax revenues can partially offset the decline in GDP by providing the government with funds to stimulate the economy through spending and investment. Therefore, the best choice is B: decline; offset.

As GDP Decreases, Tax Revenues _____, Which Tend to Partially