Question

If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should Group of answer choices rise proportionately more than the change in GDP. rise proportionately less than the change in GDP. fall proportionately more than the change in GDP. fall proportionately less than the change in GDP.

Answer 1

Answer:

rise proportionately more than the change in GDP.

Explanation:

Automatic stabilizers minimise the impact of fluctuations the economy automatically without the intervention of the government.

An example of automatic stabilizers is proportional tax.

As real GDP increases, the amount of tax revenue increases and disposable income falls and as real GDP falls, tax revenue falls and disposable income rises.

I hope my answer helps you