Asked by Wajahat Jabbar on Jun 24, 2024
Verified
An example of an automatic stabilizer is
A) unemployment benefits.
B) a lowering of interest rates by the Fed.
C) a decrease in money demand.
D) a decrease in tax rates in response to a recession.
Automatic Stabilizer
Economic policies and programs, such as unemployment insurance and progressive taxation, that automatically adjust to counteract economic fluctuations without the need for explicit government intervention.
Unemployment Benefits
Payments made by the government to unemployed individuals, intended to provide a source of income while they seek new employment.
- Acknowledge the essential function of automatic stabilizers in economic systems and their consequences on output and employment metrics.
Verified Answer
KC
Kayla CowhyJun 25, 2024
Final Answer :
A
Explanation :
Unemployment benefits automatically increase when the economy enters a recession, providing individuals with income when they lose their jobs. This helps to stabilize the economy by maintaining consumer spending without the need for new legislation.
Learning Objectives
- Acknowledge the essential function of automatic stabilizers in economic systems and their consequences on output and employment metrics.
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