An automatic stabilizer
A) injects money into the economy during booms.
B) extracts money from the economy during recessions.
C) is exemplified by a program such as unemployment compensation.
D) is exemplified by a program such as the Corps of Engineers dam-building program.

Question

Quizplus · Accepted Answer

An automatic stabilizer is a government program or policy that helps stabilize the economy during times of economic fluctuations without needing explicit action from policymakers. Unemployment compensation is an example of an automatic stabilizer because it injects money into the hands of those who have lost their jobs and stimulates consumption, which helps to counteract a recession.

An Automatic Stabilizer