Why Are Income Taxes in Canada Considered to Be Automatic

question 38

Multiple Choice

Why are income taxes in Canada considered to be automatic stabilizers? Because

• A)tax revenues increase when income increases,thereby offsetting some of the increase in aggregate demand.
• B)tax revenues decrease when income increases,thereby intensifying the increase in aggregate demand.
• C)tax structures can be changed when the Minister of Finance brings down a budget.
• D)tax revenues are changed through discretionary fiscal policy to keep the budget balanced.
• E)tax revenues are changed through discretionary fiscal policy to create surpluses in recessions.

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Central Selling Point

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