Transfer payments are an example of a/an:
A)discretionary stabiliser.
B)countercyclical stabiliser.
C)procyclical stabiliser.
D)seasonal stabiliser.
E)automatic stabiliser.

Question

Quizplus · Accepted Answer

Transfer payments are an example of automatic stabilizers, which are government programs that automatically adjust to changes in the economy and act as a stabilizing force. In times of economic downturns, transfer payments such as unemployment benefits and welfare payments increase, providing support to households that have lost income. This helps to stabilize the economy by increasing aggregate demand and offsetting the decline in consumer spending. Conversely, in times of economic upturns, transfer payments decrease, reducing the demand for government resources and acting as a restraint on economic growth.

Transfer Payments Are an Example of A/an