Income Taxes in Canada Can Be Considered to Be Automatic

question 32

Multiple Choice

Income taxes in Canada can be considered to be automatic stabilizers because tax

• A)revenues increase when income increases,thereby offsetting some of the increase in aggregate demand.
• B)revenues decrease when income increases,thereby intensifying the increase in aggregate demand.
• C)structures can be changed when the Minister of Finance brings down a budget.
• D)revenues are changed through discretionary fiscal policy to keep the budget balanced.
• E)revenues are changed through discretionary fiscal policy to create surpluses in recessions.

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Definitions:

Power of a Test

The probability that a statistical test will correctly reject a false null hypothesis; a measure of a test's ability to detect an effect when there is one.

Null Hypothesis

A statement used in statistics that proposes there is no significant difference or effect, and any observed difference is due to sampling or experimental error.

Probability

A gauge for predicting the chance that an event will happen, expressed in numbers that fall within 0 and 1.

Power Consumption

The amount of energy consumed by a device or system in a given period.