What is the effect of automatic stabilizers on the business cycle?
A) to make upswings larger and downswings smaller
B) to make upswings smaller and downswings larger
C) to make upswings smaller and downswings smaller
D) to make upswings larger and downswings larger

Question

What is the effect of automatic stabilizers on the business cycle?  
A) to make upswings larger and downswings smaller 
B) to make upswings smaller and downswings larger 
C) to make upswings smaller and downswings smaller 
D) to make upswings larger and downswings larger

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment insurance and progressive taxation, work to counteract changes in the business cycle by reducing government spending during upswings and increasing it during downswings. This serves to mitigate the size of both upswings and downswings, making them smaller overall.

What Is the Effect of Automatic Stabilizers on the Business