ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Congress raises Social Security Taxes.
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A new infrastructure project is created.
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The government collects less revenue during a recession from the individual income tax.
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Corporate income tax rates are reduced.
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Detailed explanation-1: -Examples of this include one-time tax cuts or refunds, government investment spending, or direct government subsidy payments to businesses or households.
Detailed explanation-2: -The most prominent automatic stabilizers are taxes, unemployment insurance (UI), the Supplemental Nutrition Assistance Program (SNAP), and Medicaid.
Detailed explanation-3: -The most well-known automatic stabilizers are gradual income and income taxes and transfer systems such as unemployment insurance and social assistance. Automatic stabilizers are called this because they act to stabilize economic cycles and are automatically triggered without additional government action.
Detailed explanation-4: -Taxes are automatic stabilizers Taxes work as an automatic stabilizer by increasing disposable income in downturns and decreasing disposable income during booms.
Detailed explanation-5: -Which of the following is an example of an automatic stabilizer that can reduce the effect of a recession on output? Tax revenues are an example of an automatic stabilizer.