What Is the Effect of an Automatic Stabilizer, Such as a Progressive

question 79

Multiple Choice

What is the effect of an automatic stabilizer, such as a progressive tax system, in relation to government spending?  

• A) It keeps taxes and government spending in a constant ratio to each other throughout the business cycle. 
• B) It increases taxes relative to government spending during contractions, and decreases taxes in expansions. 
• C) It decreases taxes relative to government spending during contractions, and increases taxes in expansions. 
• D) It increases taxes relative to government spending throughout the business cycle.

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Definitions:

Narcissism

A personality trait characterized by an inflated sense of self-importance and a deep need for admiration and attention.

Grandiose View

An exaggerated self-perception of being superior, unique, or exceptional, often seen in narcissistic personality traits.

Self-awareness

Acquaintance with oneself, including character attributes, emotional experiences, underlying motivations, and personal wishes.

Catharsis

A therapeutic release of emotions, often achieved through expressing feelings and discussing personal experiences.