Automatic stabilizers tend to stabilize the level of economic activity because they
A)Are changed quickly by Congress.
B)Increase the size of the multiplier.
C)Increase spending during recessions and reduce spending during inflationary periods.
D)Control the rate of change in prices.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government programs and policies that automatically increase government spending and/or decrease taxes during economic downturns and reduce government spending and/or increase taxes during inflationary periods, without any specific action by Congress. This stabilizes the economy by increasing or decreasing demand without the delay inherent in passing new legislation. Therefore, Choice C is the best answer.

Automatic Stabilizers Tend to Stabilize the Level of Economic Activity