Which of the following is NOT an automatic stabilizer?
A)the minimum wage
B)the unemployment compensation system
C)the federal income tax
D)the welfare system

Question

Quizplus · Accepted Answer

The minimum wage is not an automatic stabilizer because it does not automatically adjust based on economic conditions. Rather, it is typically determined by legislative action at either the state or federal level. The other choices are automatic stabilizers, meaning that they automatically provide economic support during times of economic downturns. For example, when unemployment rises, the unemployment compensation system automatically provides financial support to those who have lost their jobs. Similarly, the federal income tax and welfare system provide a counter-cyclical economic stimulus by automatically increasing or decreasing government spending based on economic conditions.

Which of the Following Is NOT an Automatic Stabilizer