Which of the following statements is (are) true? I. Automatic stabilizers require overt action by Congress or other policymakers to implement.
II) Discretionary increases in government spending are classified as automatic stabilizers.
III) When the economy is growing, tax receipts increase and transfer payments decrease, helping to automatically stabilize the economy by preventing it from growing too fast.

Question

Quizplus · Accepted Answer

Automatic stabilizers work without the need for new legislation or action by policymakers. They include mechanisms like tax receipts and transfer payments that naturally adjust with the economic cycle, as described in statement III. Statements I and II are incorrect because they mischaracterize automatic stabilizers.

Which of the Following Statements Is (Are) True? I