Which of the following is an automatic stabilizer that reduces tax receipts during a recession?
A)Welfare benefits.
B)Medicaid.
C)Corporate and individual income taxes.
D)Indexed retirement and Social Security benefits.

Question

Quizplus · Accepted Answer

Automatic stabilizers are policies or programs that help stabilize the economy without any additional government action. One such stabilizer is the progressive tax system, where individual and corporate income taxes automatically decrease during a recession as individuals and businesses earn less income. This results in a lower tax receipt for the government, helping to stimulate the economy by leaving more money in people's pockets. The other choices, like welfare benefits and Medicaid, are also automatic stabilizers, but they increase government spending during a recession, rather than decreasing tax receipts. Indexed retirement and Social Security benefits also help stabilize the economy, but they do not directly impact tax receipts.

Which of the Following Is an Automatic Stabilizer That Reduces