Question

Question 5 2 pts If an economy moves into a recession, causing that country to produce less than potential GDP, then: O automatic stabilizers will cause tax revenue to decrease and government spending to increase. O automatic stabilizers will cause tax revenue to increase and government spending to decrease. O tax revenue and government spending will be higher because of automatic stabilizers. O tax revenue and government spending will be lower because of automatic stabilizers.

Answer 1

A) Automatic stabilizers will cause tax revenue to decrease and government spending to rise if an economy enters a recession and produces less than its potential GDP.

How are tax revenues affected by automatic stabilizers?

When the economy slows, automatic stabilizers—which are built into government budgets but do not require a vote from legislators—increase spending or lower taxes.

During a recession, how will automatic stabilizers affect the economy?

Programmed stabilizers assist with padding the effect of downturns on individuals, assisting them with remaining above water assuming they lose their positions or on the other hand in the event that their organizations endure. By boosting aggregate demand when it lags, they contribute to making downturns shorter and less severe than they would otherwise be, a crucial macroeconomic function.

To learn more about automatic stabilizers here:

https://brainly.com/question/13376645

#SPJ4