Question: For various reasons, fiscal policy changes automatically when output and employment fluctuate. a. Explain why tax revenue changes when the economy goes into a recession.

For various reasons, fiscal policy changes automatically when output and employment fluctuate.
a. Explain why tax revenue changes when the economy goes into a recession.
b. Explain why government spending changes when the economy goes into a recession.
c. If the government were to operate under a strict balanced-budget rule, what would it have to do in a recession? Would that make the recession more or less severe?

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