Automatic stabilizers act to ______ government expenditures and _______ government revenue during an expansionary period?
Correct answer: B. decrease; increase
- A. increase; increase
- B. decrease; increase
- C. increase; decrease
- D. decrease; decrease
Explanation
During expansion, unemployment-related benefits and similar government expenditures fall, while tax revenue rises as incomes and profits increase. These automatic changes reduce aggregate demand pressure without new legislation.
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