Which of the following is NOT an automatic stabilizer?
A) the minimum wage
B) the employment insurance benefits
C) the federal income tax
D) the welfare system

Question

Quizplus · Accepted Answer

The minimum wage is not an automatic stabilizer because it does not directly respond to changes in economic conditions. Instead, it is a policy enacted by the government that sets a minimum wage that employers must pay their employees. In contrast, the other options listed - employment insurance benefits, federal income tax, and the welfare system - are all automatic stabilizers that help to stabilize the economy by automatically increasing or decreasing government spending or revenues in response to changes in economic activity.

Which of the Following Is NOT an Automatic Stabilizer