Automatic stabilizers are policies that:
A) respond to fluctuations in the economy without requiring elected government leaders to take any new actions.
B) require employers to maintain employment levels regardless of economic conditions.
C) keep government spending and taxes at a consistent, stable level to stabilize the economy.
D) raise the taxes during recessions and lower them during inflation.

Question

Quizplus · Accepted Answer

Automatic stabilizers are designed to automatically adjust government spending or taxes in response to economic changes, such as fluctuations in national income, without the need for new legislative action. This helps to moderate the effects of economic cycles by providing a counter-cyclical response to economic downturns (e.g., by increasing government spending or reducing taxes) or overheating economies (e.g., by reducing government spending or increasing taxes), thus stabilizing the economy.

Automatic Stabilizers Are Policies That