Question:
During recession when GDP falls, disposable income falls less sharply and consumption does not drop as much as it otherwise would have fallen, had the tax liability been fixed. Ideutify the correct statements in context of this.
A) The proportional tax acts as an automatic stabiliser- a shock absorber.
B) When GDP rises, disposable income rises by greater than the rise in GDP.
C) Proportional tax makes consumer spending more sensitive to fluctuations.
D) This reduces the fall in aggregate demand and stabilises the economy.
Choose the correct answer from the options given below:
During recession when GDP falls, disposable income falls less sharply and consumption does not drop as much as it otherwise would have fallen, had the tax liability been fixed. Ideutify the correct statements in context of this.
A) The proportional tax acts as an automatic stabiliser- a shock absorber.
B) When GDP rises, disposable income rises by greater than the rise in GDP.
C) Proportional tax makes consumer spending more sensitive to fluctuations.
D) This reduces the fall in aggregate demand and stabilises the economy.
Choose the correct answer from the options given below:
A) The proportional tax acts as an automatic stabiliser- a shock absorber.
B) When GDP rises, disposable income rises by greater than the rise in GDP.
C) Proportional tax makes consumer spending more sensitive to fluctuations.
D) This reduces the fall in aggregate demand and stabilises the economy.
Choose the correct answer from the options given below:
Updated On: May 18, 2024
- B and C only
- A and B only
- A and D only
- C and D only
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The Correct Option is C
Solution and Explanation
The correct option is (C): A and D only
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