An example of automatic stabilizers is
A) government spending rising during an expansion.
B) government spending falling during a recession.
C) taxes rising in an expansion.
D) deficit targeting.

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. Taxes rising in an expansion is an example of an automatic stabilizer because as incomes increase, people move into higher tax brackets, which naturally increases tax revenues and helps cool down the economy.

An Example of Automatic Stabilizers Is