Suppose that the economy is presently operating at full employment. If there is a decrease in national income, which of the following will occur automatically?

A. Upper A decrease in tax rates.

B. Upper A decrease in tax revenues.

C. An increase in tax rates.

D. Upper A decrease in unemployment compensation spending.

Question

Social Studies

Marley Kent

12 July, 12:51

Suppose that the economy is presently operating at full employment. If there is a decrease in national income, which of the following will occur automatically?

A. Upper A decrease in tax rates.

B. Upper A decrease in tax revenues.

C. An increase in tax rates.

D. Upper A decrease in unemployment compensation spending.

+2

Answers (1)

Know the Answer?

Katie · Answer 1

option B

Explanation:

The correct answer is option B.

If national income decreases the government will automatically decrease in tax revenue.

A tax revenue is the gain by the government through taxation.

Tax revenue is the revenue collected by the government on the income, profits.

If national income decreases the personal income of the people will also decrease hence the expenditure by the people of the country also decreases which lead to decrease in tax collection.