Automatic stabilizers are government programs that tend to
A)reduce the ups and downs in aggregate demand without legislative action.
B)bring expenditures and revenues automatically into balance without legislative action.
C)signal Congress that legislative changes are needed.
D)increase tax collections automatically during a recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment insurance and progressive income taxes, work to counteract fluctuations in the economy without requiring any additional legislative action. For example, during a recession, more individuals may become unemployed and receive unemployment insurance benefits, which helps to increase their income and stimulate demand in the economy. Therefore, automatic stabilizers can help to reduce the volatility of the business cycle.

Automatic Stabilizers Are Government Programs That Tend to