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:

Naturalistic Observation Method

A study approach where individuals are monitored in their original surroundings, with no intervention by the researcher.

Experimental Method

A research methodology that involves manipulating one variable to determine if changes in one variable cause changes in another.

Correlational Method

A research strategy that examines the extent to which two variables are naturally related, without manipulating any of the variables.

Psychometric Approach

A method in psychology that involves measuring mental capacities and processes through standardized tests.