All of the following are an example of an automatic stabilizer except for:
A) A decrease in income tax revenue during a recession.
B) An increase in unemployment benefits during a recession.
C) An increase in interest rates during a period of inflation.
D) A decrease in government welfare spending during an economic expansion.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government programs or policies that automatically counteract economic fluctuations. Options A and B are examples of automatic stabilizers because they provide increased support to individuals during recessions. Option D is the opposite, as it decreases spending during economic expansions. Option C, however, is not an example of an automatic stabilizer as an increase in interest rates would not automatically occur during a period of inflation. It would result from the actions of the central bank or government policy.

All of the Following Are an Example of an Automatic