Which of the following best describes the built-in stabilizers as they function in the United States?

A- Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.
B- The size of the multiplier varies inversely with the level of GDP.
C- Personal and corporate income tax collections automatically fall and transfers and subsidies automatically rise as GDP rises.
D- Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.

ANSWER:

Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.