Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?
A)Services have become a smaller fraction of GDP since the 1950s.
B)Unemployment insurance and other government transfer programs are more prevalent since the 1950s.
C)The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
D)both B and C

Question

Quizplus · Accepted Answer

Unemployment insurance and other government transfer programs, which have become more prevalent since the 1950s, help to stabilize individuals' incomes during economic downturns, thus reducing the volatility of real GDP fluctuations.

Which of the Following Explains Why Fluctuations in Real GDP