During expansions, what do automatic stabilizers make government expenditures and taxes do?
A) They make government expenditures and taxes fall.
B) They make government expenditures and taxes rise.
C) They make government expenditures rise and taxes fall.
D) They make government expenditures fall and taxes rise.

Question

Quizplus · Accepted Answer

Automatic stabilizers are designed to counteract the economic cycle. During expansions, when the economy is growing, automatic stabilizers work to slow down the growth by increasing taxes and decreasing government expenditures. Therefore, they make government expenditures fall and taxes rise.

During Expansions, What Do Automatic Stabilizers Make Government Expenditures and Taxes