Automatic stabilizers are government spending and taxation changes that cause fiscal policy to be _____ when the economy contracts.
A)expansionary
B)contractionary
C)neutral
D)ineffective

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment benefits and progressive taxes, increase government spending or decrease taxes when the economy contracts, making fiscal policy expansionary to help stabilize the economy.

Automatic Stabilizers Are Government Spending and Taxation Changes That Cause