If the economy is to have significant built-in stability, then when real GDP inc

ID: 1178191 • Letter: I

Question

If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should:

Answer

Fall proportionately more than the change in GDP

Fall proportionately less than the change in GDP

Rise proportionately more than the change in GDP

Rise proportionately less than the change in GDP

The short-run aggregate supply curve:

Answer

Becomes flatter at output levels above the full-employment output

Becomes steep at output levels above the full-employment output

Is upward-sloping with a constant slope

Is horizontal

If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should:

Fall proportionately less than the change in GDP

The short-run aggregate supply curve:

Becomes steep at output levels above the full-employment output

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