If Canada’s economy moves into an expansion while its economy is producing more than potential GDP, then:
A. government spending and tax revenue will increase because of automatic stabilizers.
B. government spending and tax revenue will decrease because of automatic stabilizers.
C. automatic stabilizers will increase government spending and decrease tax revenue.
D. automatic stabilizers will decrease government spending and increase tax revenue.
Answer:D
If Canada’s economy moves into an expansion while its economy is producing more than potential GDP, then:
A. government spending and tax revenue will increase because of automatic stabilizers. B. government spending and tax revenue will decrease because of automatic stabilizers. C. automatic stabilizers will increase government spending and decrease tax revenue. D. automatic stabilizers will decrease government spending and increase tax revenue.
Explanation: Type: Multiple Choice