Automatic stabilizers include
A)changes in induced taxes and changes in needs-tested spending.
B)increases or decreases of tax rates and changes in needs-tested spending.
C)changes in induced taxes and changes in discretionary spending.
D)changes in discretionary spending and changes in needs-tested spending.
E)changes in the federal funds interest rate brought about by Fed policy.

Question

Quizplus · Accepted Answer

Automatic stabilizers are policies that automatically help stabilize the economy without any additional action from policymakers. The two main types of automatic stabilizers are changes in induced taxes (taxes that vary with GDP, like income taxes) and changes in needs-tested spending (government spending that increases during recessions, like unemployment benefits). Therefore, choice A is the best answer as it includes both of these types of automatic stabilizers.

Automatic Stabilizers Include