Automatic stabilizers
A) work counter-cyclically to moderate the business cycle.
B) often make any downturn in the economy worse.
C) must be determined by the Congress in each budget.
D) are never altered.

Question

Quizplus · Accepted Answer

Automatic stabilizers are policies and programs that automatically adjust government spending and/or taxation in response to changes in the economy. They work counter-cyclically, meaning they help to stabilize the economy by offsetting fluctuations in economic activity. For example, during a recession, automatic stabilizers like unemployment insurance and progressive taxation can help to boost spending and support individuals and families who have lost their jobs. Thus, option A is the correct answer. Option B is incorrect as automatic stabilizers are designed to stabilize the economy and not make things worse. Option C is incorrect as automatic stabilizers are already built into the budget and do not need to be determined separately by Congress. Option D is incorrect as automatic stabilizers can be adjusted through changes in policy or legislation.

Automatic Stabilizers