During economic contractions,transfer payments such as welfare benefits
A)automatically increase,reducing incomes further
B)automatically increase,reducing the impact of the contraction on disposable income
C)automatically decrease,because tax revenues fall and welfare benefits are no longer affordable
D)are decreased,as a discretionary move on the part of Congress to stimulate expansion
E)are increased,as a discretionary move on the part of Congress to cushion recipients against the negative effects of economic contraction

Question

Quizplus · Accepted Answer

Transfer payments such as welfare benefits automatically increase during economic contractions, which helps to reduce the impact of the contraction on disposable income. This is because individuals who may have lost their jobs or experienced a reduction in hours are able to receive assistance, which allows them to continue spending and supporting the economy.

During Economic Contractions,transfer Payments Such as Welfare Benefits