Multiple Choice
Suppose the government never borrows, so that it always finances its expenditures with taxes. Suppose further that government spending does not depend on income. In this case:
A) both government spending and taxes are automatic stabilizers.
B) government spending is an automatic stabilizer, but taxes are not.
C) taxes are an automatic stabilizer but government spending is not.
D) neither government spending nor taxes are automatic stabilizers.
Correct Answer:
Verified
Correct Answer:
Verified
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