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13. If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then______.

A. government spending and tax revenue will increase because of automatic stabilizers
B. government spending and tax revenue will decrease because of automatic stabilizers
C. automatic stabilizers will increase government spending and decrease tax revenue
D. automatic stabilizers will decrease government spending and increase tax revenue.

User CodaFi
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Answer:

Option D

Step-by-step explanation:

In simple words, Automatic stabilizers relates to the ongoing government regulations that modify tax levels and transfer disbursements invariably in a way set to stabilize revenues, usage, and corporate expenditure over the economic cycle.

Automatic stabilizers may involve the usage of a variable taxation system in which the proportion of income earned in tax payments is greater while revenue is strong and decreases when earnings declines due to downturn, unemployment, or investment failures.

User David Mape
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