An example of automatic stabilizers is
A) government spending falling in a recession.
B) taxes falling in a recession.
C) deficit targeting.
D) all of the above

Question

Quizplus · Accepted Answer

Automatic stabilizers are government policies and programs that automatically stimulate or dampen economic activity in response to changes in economic conditions. Taxes falling in a recession can increase disposable income and help boost consumption, which can help stabilize the economy. On the other hand, government spending falling in a recession can exacerbate the economic downturn, making it a destabilizing factor rather than a stabilizing one. Deficit targeting is not an example of an automatic stabilizer, as it involves deliberate policy actions rather than automatic adjustments.

An Example of Automatic Stabilizers Is