Automatic stabilizers cause an increase in total revenue for the government as the economy enters a recession.
Automatic stabilizers cause a decrease in total revenue for the government as the economy enters a recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment insurance payments and increased welfare spending, cause an increase in government spending during a recession. This leads to a decrease in total revenue for the government as they need to finance this increased spending through borrowing or raising taxes. Therefore, option B is correct.

Automatic Stabilizers Cause an Increase in Total Revenue for the Government