uppose the government implements a permanent reduction in the net tax rate in an effort to increase real GDP. One disadvantage of this policy is that...

a.The level of private investment increases which destabilises the level of real GDP.

b.The level of private investment decreases, which opens up a recessionary gap.

c.Further reductions in the net tax rate are required to maintain the effectiveness of the tax rate as an automatic stabilizer.

d.The effect of the automatic stabiliser is reduced and the economy is more unstable.

e.The effect of economic shocks on government revenues becomes more volatile, while the economy becomes more stable.