deeoki2182 deeoki2182
  • 16-11-2020
  • Business
contestada

If an economy moves into a recession, causing that country to produce less than potential GDP, then: ________

Respuesta :

Parrain
Parrain Parrain
  • 17-11-2020

Answer: 2) automatic stabilizers will cause tax revenue to decrease and government spending to increase.

Explanation:

If a country moves into a recession and starts producing less as the question says, automatic stabilizers will force the government into an expansionary fiscal policy where they will increase government spending and decrease tax revenue.

This is done so that people have more money to spend on goods and services which will reduce the rate at which the recession is happening and hopefully reverse it.

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