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:

Random Sample

A method of selecting a subset of individuals from a population in which each individual has an equal probability of being chosen.

University Population

The total number of individuals within a university setting, including students, faculty, and administrative staff.

Dorms Residents

Individuals living in a dormitory, which is a residence hall providing sleeping and residential quarters for large numbers of people such as students in a college or university.

Individual Difference Variables

Variables that describe ways in which individuals differ from each other in their behavior, traits, and cognition.