During periods of expansion, automatic stabilizers cause government expenditures to rise and taxes to fall. a) trueb) false

The answer is false

Explanation:

Expansions in the business cycle cause automatic stabilizers in the form of taxes to rise, and those in the form of government expenditures to fall.

An example of an automatic stabilizer is a progressive income tax scheme that adjusts to economic activity: rates rise when incomes are higher and economic activity is expanding, and rates fall when incomes are lower and economic activity is contracting.

Another example of an automatic stabilizer is transfer payments that increase when incomes are low in times of economic contraction, and decrease when incomes are high in times of economic growth.

In conclusion, the correct answer would be exactly the opposite: during periods of economic expansion, automatic stabilizers cause government expenditures to fall, and taxes to rise. Hence, the answer for this question is false.