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Which of the Following Is an Example of an Automatic

Question 42

Multiple Choice

Which of the following is an example of an automatic fiscal policy action?


A) A decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession.
B) An increase in unemployment benefit payments resulting from higher unemployment.
C) An increase in the tax rate resulting from a desire to shrink the budget deficit.
D) An increase in spending on defence goods resulting from increased tension with Indonesia.
E) None of the above answers is correct.

Correct Answer:

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