Consider the following list of government policies.
i. welfare programs
ii. student loans
iii. lower income tax rates
iv. progressive income tax rates
v. unemployment compensation vi. tax credits for research and development Which are examples of automatic stabilizers?

Question

Consider the following list of government policies.
i. welfare programs 
ii. student loans
iii. lower income tax rates 
iv. progressive income tax rates
v. unemployment compensation vi. tax credits for research and development Which are examples of automatic stabilizers?

Quizplus · Accepted Answer

Automatic stabilizers are policies that automatically stabilize the economy during economic downturns without the need for government intervention. Welfare programs, progressive income tax rates, and unemployment compensation are all examples of automatic stabilizers because they provide automatic assistance to individuals and families during recessions or periods of high unemployment. Student loans and tax credits for research and development are not automatic stabilizers as they do not provide direct assistance during economic downturns. Lower income tax rates are also not an automatic stabilizer as they do not provide direct assistance to individuals during economic downturns. Therefore, the best choice is B since it includes examples of all three types of automatic stabilizers (welfare programs, progressive income tax rates, and unemployment compensation).

Consider the Following List of Government Policies