Question

During economic expansions: outlays increase and tax revenue falls. outlays increase and tax revenue increases. outlays...

During economic expansions:

outlays increase and tax revenue falls.

outlays increase and tax revenue increases.

outlays decrease and tax revenue increases.

outlays decrease and tax revenue falls.

outlays and tax revenue stay the same.

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Homework Answers

Answer #1

Option C.

  • Economic expansion refers to a situation in which the ecomomy is experiencing growth in real GDP and has become Economically and productively efficient.
  • When Economy is experiencing a boom or expansion, the government imposes higher taxes on goods and services which decreases the level of spending or outlays on various goods and services due to the decline in consumption demands.
  • But the economic expansion provides Incentives to the government to earn more revenues from taxes they impose on various goods and services.
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