During recessions,automatic stabilizers tend to make the government's budget
A)move toward deficit.
B)move toward surplus.
C)move toward balance.
D)not necessarily move the budget in any particular direction.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government spending and tax policies that automatically adjust to economic changes in order to stabilize the economy. During a recession, automatic stabilizers tend to increase government spending (unemployment benefits, Medicaid, etc.) and decrease tax revenues (due to lower incomes and profits). This causes the government's budget to move towards a deficit. Therefore, the best choice is A, move toward deficit.

During Recessions,automatic Stabilizers Tend to Make the Government's Budget