Which of the following is an automatic stabilizer?
A) unemployment insurance
B) government spending
C) net taxes
D) the interest rate
E) the minimum wage set by the government

Question

Quizplus · Accepted Answer

Unemployment insurance is an automatic stabilizer as it provides income support to individuals who lose their jobs due to economic downturns, which helps to stabilize aggregate demand by maintaining consumer spending. As unemployment rises, more people become eligible for unemployment benefits, increasing transfer payments from the government and helping to buoy demand without requiring any additional government action.

Which of the Following Is an Automatic Stabilizer