Unemployment benefits act as automatic stabilisers by:
A)allowing for more consumer spending during prosperity.
B)increasing spending during a recession.
C)making the unemployment rate worse during a recession.
D)allowing for less consumer spending during a recession.
E)changing the Phillips curve to a Laffer curve.

Question

Quizplus · Accepted Answer

Unemployment benefits act as automatic stabilisers by increasing spending during a recession. When individuals lose their jobs, they typically have less income to spend, which can lead to a decrease in overall spending in the economy. Unemployment benefits provide some income replacement for individuals who have lost their jobs, enabling them to continue consuming goods and services. This increased spending can counteract the decrease in spending from job losses and help to stabilize the economy during a downturn.

Unemployment Benefits Act as Automatic Stabilisers By