Automatic Stabilizers
Which of the following accurately describes the relationship between social service programs and the business cycle?
Social service programs help alleviate cyclical unemployment and inflation.
Which of the following statements about a progressive income tax structure is accurate?
The more a person earns, the greater their tax burden.
Which of the following is an example of an automatic stabilizer?
Unemployment benefits
Increasing tax revenues and falling transfer payments are an automatic response to
an inflationary period
As GDP increases, tax revenue _____ and the unemployment rate generally ______.
increases; decreases