During recessions, how do automatic stabilizers tend to make the government's budget move?
A)They make the budget move toward deficit.
B)They make the budget move toward surplus.
C)They make the budget move toward balance.
D)They do not necessarily move the budget in any particular direction.

Question

Quizplus · Accepted Answer

Automatic stabilizers are programs or policies, such as unemployment insurance and progressive income taxes, that automatically expand during recessions and contract during economic expansions. These stabilizers tend to increase government spending and decrease tax revenue during recessions, thereby causing the government's budget to move toward deficit.

During Recessions, How Do Automatic Stabilizers Tend to Make the Government's