Automatic stabilizers are changes in ________ that occur automatically as economic activity changes.
A) taxes and transfer payments
B) unemployment
C) inflation
D) the money supply

Question

Quizplus · Accepted Answer

Automatic stabilizers are changes in taxes and transfer payments that occur automatically as economic activity changes. When the economy is booming, tax revenues tend to rise and demand for transfer payments (such as unemployment benefits) tend to fall. Conversely, when the economy is in a downturn, tax revenues tend to fall and demand for transfer payments tend to rise. These changes help stabilize the economy without the need for additional policy intervention.

Automatic Stabilizers Are Changes in ________ That Occur Automatically as Economic