Which of the Following Is an Example of an Automatic

question 79

Multiple Choice

Which of the following is an example of an automatic stabilizer?

• A) Congress legislates lower tax rates to increase consumption and investment.
• B) Tax rates are increased during a recession to maintain a balanced budget.
• C) A regressive income tax system reduces tax revenues (as a share of income) as income expands.
• D) Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.

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Definitions:

Normal Faults

Fractures in the Earth's crust where rock layers have moved vertically relative to each other due to extensional forces.

Shearing

The deformation of a material by slippage along parallel planes, often associated with faults and seismic activity in the Earth's crust.

Anticline

A type of fold in rock layers that forms an arch-like shape, with the oldest layers at the core.

Offset

The distance by which a geological feature, such as a fault or layer, is displaced due to tectonic movements.