Income taxes in the United States are part of automatic fiscal policy because
A) tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand.
B) tax revenues decrease when income increases, intensifying the increase in aggregate demand.
C) the President can increase tax rates whenever the President deems such a policy appropriate.
D) tax rates can be adjusted by the Congress to counteract economic fluctuations.
Correct Answer:
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Q124: When the economy grows, _ increase because
Q125: The government budget deficit tends to decrease
Q126: The tax rebates passed by Congress in
Q127: Needs-tested spending _ during recessions and _
Q128: A fall in income that results in
Q130: Automatic fiscal policy is at work if,
Q131: During an expansion, tax revenues _, while
Q132: Tax revenues _ during recessions and _
Q133: Tax revenues
A) are autonomous.
B) are independent of
Q134: An example of automatic fiscal policy is
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