Question

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.

Answer 1

option B

Step-by-step 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.