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

Question

Quizplus · Accepted Answer

Automatic stabilizers work without explicit government intervention to stabilize the economy. When the economy expands, government spending typically falls as a percentage of GDP, which helps to cool down the expansion without any new legislation or policy changes. This is because, in an expansion, more people are employed and fewer people need government assistance, such as unemployment benefits.

An Example of Automatic Stabilizers Is