Automatic stabilizers

Question

Quizplus · Accepted Answer

All of the choices are true of automatic stabilizers. Automatic stabilizers are built into the economy and automatically activate during economic downturns or recessions, without any deliberate government action. These automatic stabilizers include income taxes, which tend to decrease during a recession as people earn less income, and various forms of government transfers such as unemployment benefits, which increase during a recession as more people become unemployed. In-kind assistance such as food stamps and housing vouchers are also examples of automatic stabilizers. Therefore, all of the choices in the question are true of automatic stabilizers.

Automatic Stabilizers