Automatic stabilizers refer to
A)the money supply and interest rates that automatically increase or decrease along with the business cycle.
B)government spending and taxes that automatically increase or decrease along with the business cycle.
C)changes in the money supply and interest rates that are intended to achieve macroeconomic policy objectives.
D)changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

Question

Quizplus · Accepted Answer

Automatic stabilizers refer to government spending and taxes that automatically increase or decrease along with the business cycle. As the economy goes into a recession, tax revenues fall and spending on programs like unemployment insurance automatically increase, providing a stabilizing influence on the economy without any specific policy action from the government.

Automatic Stabilizers Refer to