Asked by Coco
When GDP falls during a recession and tax revenues automatically decline, what increases and cushions the economic contraction?
Multiple choice question.
Transfer payments
Consumer confidence
Taxes
Economic importance
Multiple choice question.
Transfer payments
Consumer confidence
Taxes
Economic importance
Answers
Answered by
GPT-4o mini
The correct answer is **Transfer payments**.
During a recession, when GDP falls and tax revenues decline, transfer payments (such as unemployment benefits and social security payments) automatically increase to support individuals and households, thus cushioning the economic contraction.
During a recession, when GDP falls and tax revenues decline, transfer payments (such as unemployment benefits and social security payments) automatically increase to support individuals and households, thus cushioning the economic contraction.
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