When the economy begins to slip into a recession,the automatic stabilizers cause

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When the economy slips into a recession, incomes and employment levels decrease, which leads to a decrease in tax collections and an increase in transfer payments such as unemployment benefits. This is known as the automatic stabilizers, as they help to stabilize the economy during a downturn. Therefore, choice A is the correct answer. Choice B is incorrect, as increasing tax rates during a recession would further decrease consumer spending and worsen the recession. Choice C is incorrect; interest rates are typically adjusted by the Federal Reserve to combat inflation or to stimulate economic growth, not to address recessions. Choice D is incorrect, as the government typically runs a budget deficit during a recession to provide fiscal stimulus for the economy. Choice E is also incorrect, as the budget deficit typically increases during a recession, not decreases.

When the Economy Begins to Slip into a Recession,the Automatic