As the Economy Declines into Recession, the Collection of Personal

question 246

Multiple Choice

As the economy declines into recession, the collection of personal income tax revenues automatically falls.This phenomenon best illustrates how a progressive income-tax system

• A)increases crowding out in the economy.
• B)decreases real interest rates in the economy.
• C)offsets the timing problem for fiscal policy.
• D)serves as an automatic stabilizer for the economy.