Government-provided unemployment insurance is an example of
A) a discretionary fiscal stabilizer.
B) an automatic fiscal stabilizer.
C) a monetary stabilizer.
D) an automatic monetary stabilizer.

Question

Quizplus · Accepted Answer

Unemployment insurance is an example of an automatic fiscal stabilizer because it automatically increases government spending during economic downturns by providing income support to individuals who have lost their jobs. This helps to stimulate the economy by increasing consumer spending and reducing the negative effect of unemployment on economic growth. A discretionary fiscal stabilizer would require a specific decision or action by policymakers to adjust spending or taxes in response to changes in the economy. Monetary stabilizers refer to actions taken by central banks to regulate the money supply and interest rates. Automatic monetary stabilizers are not a commonly used term.

Government-Provided Unemployment Insurance Is an Example of