Which of the following is an example of an automatic stabilizer?
A) a decrease in tax rates by Congress in times of unemployment
B) a decrease in tax rates by Congress in times of inflation
C) an increase in government defense spending during war
D) an increase in unemployment compensation during recession
E) a decrease in welfare programs during inflation

Question

Quizplus · Accepted Answer

An increase in unemployment compensation during a recession is an example of an automatic stabilizer because it helps to stabilize the economy by providing support to individuals who have lost their jobs, which helps to boost consumer spending and overall economic activity. Automatic stabilizers are policies that are built into the economy and are automatically triggered during economic downturns without the need for legislative action.

Which of the Following Is an Example of an Automatic