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.
Correct Answer:

Verified
Correct Answer:
Verified
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