Which of the following is the best example of an automatic stabilizer?
A) Welfare payments.
B) Foreign aid.
C) Defense spending.
D) Highway construction.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government programs or policies that automatically help stabilize the economy during a recession or expansion. Welfare payments, such as unemployment benefits, are a good example of automatic stabilizers because they increase during a recession due to more people losing their jobs and needing assistance. Foreign aid, defense spending, and highway construction are not automatic stabilizers because they do not automatically respond to changes in the economy.

Which of the Following Is the Best Example of an Automatic