If there are automatic stabilizers but no deliberate action by policymakers, how would government expenditures change as output changes?
A)They would rise as output rises.
B)They would remain unchanged as output rises.
C)They would rise as output falls.
D)They would fall as output falls.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment benefits and welfare programs, increase government expenditures when output falls, as more people qualify for these benefits during economic downturns.

If There Are Automatic Stabilizers but No Deliberate Action by Policymakers