One characteristic of built-in or automatic stabilizers is that
A)they require no new legislative action by Congress to have an effect.
B)they automatically produce surpluses during recessions and deficits during inflation.
C)they have no effect on the distribution of income.
D)they reduce the size of the public debt during times of recession.

Question

Quizplus · Accepted Answer

Built-in or automatic stabilizers are government programs that automatically increase spending or decrease taxes during a recession and decrease spending or increase taxes during inflation without the need for new legislation by Congress. Hence, option A is the correct characteristic of built-in or automatic stabilizers. Option B is incorrect since built-in or automatic stabilizers do not produce surpluses during recessions and deficits during inflation. Option C is incorrect since built-in or automatic stabilizers do affect the distribution of income. Option D is incorrect since built-in or automatic stabilizers do not reduce the size of the public debt during times of recession.

One Characteristic of Built-In or Automatic Stabilizers Is That