Which of the Following Best Describes the Built-In Stabilizers as They

question 340

Multiple Choice

Which of the following best describes the built-in stabilizers as they function in the United States?

• A) The size of the multiplier varies inversely with the level of GDP.
• B) Personal and corporate income tax collections automatically fall and transfers and subsidies automatically rise as GDP rises.
• C) Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.
• D) Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.

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Definitions:

Merchandise Inventory

Goods a company intends to sell to customers that are stored as inventory.

Purchases

Represents the total amount of goods bought by a business for resale or for use in production.

Rental Income

This is income received from renting out property or equipment. It is often considered passive income and must be reported for tax purposes.

Revenue

The total income generated from normal business operations and before any expenses are deducted.