When the economy enters a recession,automatic stabilizers create
A)higher taxes.
B)more discretionary spending.
C)larger budget deficits.
D)larger budget surpluses.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government spending and tax policies that adjust automatically to changes in the economy in order to stabilize economic activity without explicit intervention. During a recession, tax revenues automatically decrease as a result of the decrease in economic activity, while transfer payments such as unemployment benefits automatically increase, resulting in larger budget deficits.

When the Economy Enters a Recession,automatic Stabilizers Create