Built-in stability is exemplified by the fact that with a progressive tax system, net tax revenues decrease when GDP decreases.

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A progressive tax system means that as income increases, the percentage of taxes paid also increases. Therefore, during economic downturns when GDP (Gross Domestic Product) decreases and incomes also decrease, tax revenues will also decrease. This built-in stability helps to prevent drastic swings in government revenue and fiscal policy.

Built-In Stability Is Exemplified by the Fact That with a Progressive