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:

Central Nervous System

The principal part of the nervous system comprising the brain and spinal cord, responsible for processing and transmitting information in the body.

Sedative

A type of drug that calms or soothes the central nervous system, reducing anxiety, excitement, or irritation.

Hallucinogen

A substance that causes changes in perception, mood, and cognitive processes, inducing hallucinations.

Stage Hypnotist

A performer who uses hypnosis techniques on participants in front of an audience for entertainment purposes.