In an expansion, tax revenues increase proportionally more than real GDP without the need for any government policy. This increase is an example of

Question

Quizplus · Accepted Answer

This increase in tax revenues without any active intervention by the government is an example of automatic fiscal policy. Automatic fiscal policies are built-in stabilizers that automatically adjust government spending and taxation levels in response to economic changes, such as an expansion, without the need for explicit government action.

In an Expansion, Tax Revenues Increase Proportionally More Than Real