Which of the following is an automatic stabiliser?
A)Interest rate changes.
B)Increases in government spending on schools.
C)Reductions in nominal wages as inflation rates rise.
D)Unemployment benefit payments to the unemployed.

Question

Quizplus · Accepted Answer

Unemployment benefit payments to the unemployed are an automatic stabilizer because they increase during times of economic downturns as more people become unemployed and therefore need support. This increase in government spending helps to offset the contractionary forces in the economy and supports demand.

Which of the Following Is an Automatic Stabiliser