Question

Progressive income taxes are an example of _______ automatic discretionary countercyclical components of fiscal policy. A tax rebate like cash for clunkers is an example of _______ automatic discretionary countercyclical components. A _______ progressive tax tax rebate could be used to either stimulate or contract the economy.

Answer 1

Automatic, discretionary, progressive tax

Step-by-step explanation:

Progressive income taxes are an example of automatic

countercyclical components of fiscal policy. A tax rebate like cash for clunkers is an example of discretionary

countercyclical components. A progressive tax could be used to either stimulate or contract the economy.

Progressive income tax is a tax that increases with an increase in income of Individual or business organzation. It is sometimes referred to as automatic stabilizer because they automatically adjust to economic situation of a country. An increase in income level increases Progressive tax while a decrease in income level decreases progressive tax.

A tax rebate is an example of discretionary action. It is used by the government to stimulate the economy by putting more disposable income in the hands of consumers in order to increase consumption and help reverse a recession.

Other forms of taxation includes

1. Regressive tax.

2. Proportional tax