Personal income taxes and transfer payments are examples of automatic stabilizers.

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Personal income taxes and transfer payments are examples of automatic stabilizers because they help to stabilize the economy during a recession or expansion without the need for government intervention. During a recession, transfer payments such as unemployment benefits increase, providing support to those who have lost their jobs and helping to maintain consumer spending levels. Similarly, during an expansion, personal income taxes increase, reducing consumer spending levels and helping to prevent inflation.

Personal Income Taxes and Transfer Payments Are Examples of Automatic