Answer:
a. Automatic stabilizers
b. Discretionary spending
c. Automatic stabilizers
d. Discretionary spending
e. Discretionary spending
f. Discretionary spending
g. Discretionary spending
h. Automatic stabilizers
i. Automatic stabilizers
Explanation:
a. A bill to increase unemployment benefits is discretionary spending because the government has to make a decision to change something; it does not happen automatically as the economy changes.
b. Cuts in government spending to balance the budget are also a decision that is made that does not happen automatically.
c. A law to increase Medicare coverage does not happen automatically and requires action by the government.
d. Tax cuts to stimulate spending must be written into effect. Since the tax rate is set and does not change by itself, it is discretionary spending.
e. Increasing tax rates also does not happen by itself and must be changed by the government, making it discretionary spending as well.
f. Increased tax payments from economic growth is an automatic stabilizer. As the economy grows, people have more income and firms have more profits. Both therefore pay more in taxes, increasing tax payments automatically.
g. More spending on welfare due to more applicants is an automatic stabilizer too. As more people apply for and receive welfare due to a bad economy, government spending will automatically increase.
h. Tax revenue depends on the level of economic activity. When people are laid off or earn less during a recession, tax revenue falls. Likewise, a decrease in corporate profits automatically decreases taxes owed.
i. More spending on unemployment benefits due to increased layoffs is automatic because when more people are laid off and apply for unemployment benefits, spending automatically increases.
