Automatic stabilizers lead to changes in taxation and government spending as economic output varies. How do automatic
Question:
Automatic stabilizers lead to changes in taxation and government spending as economic output varies. How do automatic stabilizers impact tax revenue and government spending during a recession?
The revenue will 
and government spending will 
Suppose that the government required to balance the budget. Which of the following is an appropriate discretionary approach during a recession and what effect would it have to the economy?
Invest in Public infrastructure that promotes employment and stimulates the economy.
Cut government spending to equal tax revenue possibly magnifying the effects of a recession.
increase government spending to stimulate the economy causing an increase in overall aggregate demand.
Cut taxes to encourage consumer spending which would minimize the effects of the recession.
Expert Answer:
