When workers lose their job, they file for unemployment benefits; therefore government spending on such programs naturally rises during recessions. As the economy recovers and people go back to work, spending on unemployment programs shrinks. Based on the given information, which of the following is correct?

Question

Quizplus · Accepted Answer

Unemployment compensation is a form of an automatic stabilizer because it automatically increases during economic downturns and decreases as the economy recovers, helping to stabilize disposable income and consumption without the need for new government action.

When Workers Lose Their Job, They File for Unemployment Benefits;