Income Taxes in Canada Can Be Considered to Be Automatic

question 55

Multiple Choice

Income taxes in Canada can be considered to be automatic stabilizers because tax

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

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Definitions:

Negative Linear Relationship

A relationship in which increases in the values of the first variable are accompanied by decreases in the values of the second variable.

Operational Definitions

Specific articulations of a concept or variable in terms of the procedures or techniques used to measure or manipulate it.

Construct Validity

The degree to which a test or instrument measures the theoretical construct or psychological concept it intends to measure.

Construct Validity

Construct validity refers to the degree to which a test measures what it claims, or purports, to be measuring.