Gross domestic product (GDP) in Marthland is decreasing, plunging Marthaland into a recession.
How will the response of automatic stabilizers to decreasing GDP in Marthaland affect the economy of Marthaland?
Choose 1 answer:
A Tax revenues will decrease without governmental action, which will keep consumption and output from falling further.
(B) The government of Marthaland will respond by implementing expansionary fiscal policy, such as a new infrastructure project.
(c) Transfer payments will decrease automatically, decreasing spending and output.
(D) The government will respond by passing a one-time tax cut to stimulate the economy.
(E) The government will implement contractionary fiscal policy, such as decreasing government spending.
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