One benefit of automatic stabilizers is that they
A) decrease consumption during a recession below what it would otherwise be
B) make GDP more volatile
C) cause the cyclical deficit to fall during a recession
D) increase consumption during a recession above what it would otherwise be
E) increase consumption during an expansion above what it would otherwise be

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment insurance and progressive income taxes, increase consumption during a recession above what it would otherwise be. This is because they provide income support to individuals who have lost their jobs or have decreased income, allowing them to continue spending and maintaining aggregate demand in the economy.

One Benefit of Automatic Stabilizers Is That They