Asked by Jennifer Martinez on Mar 10, 2024
Verified
Other things the same, automatic stabilizers tend to
A) raise expenditures during expansions and recessions.
B) lower expenditures during expansions and recessions.
C) raise expenditures during recessions and lower expenditures during expansions.
D) raise expenditures during expansions and lower expenditures during recessions.
Automatic Stabilizers
Economic policies and programs designed to offset fluctuations in a nation's economic activity without the need for intervention by policymakers.
Expenditures
The amount of money spent on goods, services, or other expenses within a certain period.
Recessions
Periods of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.
- Understand the importance of automatic stabilizers within the economic framework and their effect on both output and employment levels.
Verified Answer
KR
Kelly RodriguezMar 10, 2024
Final Answer :
C
Explanation :
Automatic stabilizers are economic policies and programs designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers. They raise expenditures during recessions by increasing government spending or decreasing taxes to stimulate the economy, and lower expenditures during expansions by doing the opposite to cool down the economy. This helps to moderate the business cycle.
Learning Objectives
- Understand the importance of automatic stabilizers within the economic framework and their effect on both output and employment levels.