An example of an automatic stabilizer is:
A)tax receipts rising when GDP rises.
B)a discretionary increase in taxes.
C)government purchases of goods and services rising when GDP rises.
D)government transfers rising when GDP rises.

Question

Quizplus · Accepted Answer

Automatic stabilizers are economic policies and programs designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers. Tax receipts rising when GDP rises is an example of an automatic stabilizer because it happens automatically as incomes increase, leading to higher tax revenues.

An Example of an Automatic Stabilizer Is