Which of the following is an example of an automatic fiscal policy action?
A)increased unemployment payments resulting from higher unemployment
B)an increase in spending on defense goods resulting from increased world tensions
C)an increase in the tax rate resulting from a desire to shrink the budget deficit
D)a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession
E)None of the above answers are correct.

Question

Quizplus · Accepted Answer

Increased unemployment payments resulting from higher unemployment is an example of an automatic fiscal policy action, as it occurs automatically without any deliberate action from policymakers. As unemployment increases, more people become eligible for unemployment benefits, which results in an automatic increase in government spending.

Which of the Following Is an Example of an Automatic