Which of the following is an example of an automatic stabilizer?
A)Fed discount rate.
B)Discretionary fiscal policy that must be determined by Congress and the president.
C)Changes that are triggered by the economy and not by government decision makers.
D)Supply-side policies that Congress designs to stimulate the economy.

Question

Quizplus · Accepted Answer

Automatic stabilizers are changes in government spending and taxation that occur automatically in response to changes in economic conditions, such as a recession or inflation. They stabilize the economy without the need for any conscious action by policymakers. Examples include unemployment insurance, which automatically increases during a recession as more people become unemployed, and progressive income taxes, which automatically decrease during a recession as incomes fall. Federal discount rate, discretionary fiscal policy, and supply-side policies are not examples of automatic stabilizers.

Which of the Following Is an Example of an Automatic