Which of the following is true of automatic stabilizers?
A)They require ongoing decisions about government purchases and taxation to promote full employment and price stability.
B)They include the unemployment compensation program.
C)They tend to stimulate aggregate demand when the economy is experiencing an expansionary gap.
D)They include tax cuts passed by Congress to ease a current recession in an economy that has a proportional income tax.
E)They include government purchases of goods and services requiring Congressional approval.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government programs that automatically increase spending or decrease taxes during economic downturns, without the need for additional legislation. The unemployment compensation program is an example of an automatic stabilizer as it provides aid to those who have lost their jobs due to economic conditions, thus increasing spending and stimulating demand in the economy.

Which of the Following Is True of Automatic Stabilizers