Automatic fiscal stabilizers ________ the impact of demand or supply shocks on the economy since government's net tax revenues ________ during booms and ________ during recessions.
A)magnify; increase; decrease
B)magnify; decrease; increase
C)dampen; increase; decrease
D)dampen; decrease; increase
E)does not affect; are constant; are constant

Question

Quizplus · Accepted Answer

Automatic fiscal stabilizers dampen the impact of economic shocks because they increase tax revenues during booms (reducing demand) and decrease tax revenues during recessions (supporting demand).

Automatic Fiscal Stabilizers ________ the Impact of Demand or Supply