Which of the following is an automatic stabilizer?

A) Unemployment insurance
B) Government spending
C) Net taxes
D) The interest rate
E) The minimum wage set by the government

Question

Which of the following is an automatic stabilizer?A) Unemployment insuranceB) Government spendingC) Net taxesD) The interest rateE) The minimum wage set by the government

Jason Tersigni · Accepted Answer

Final Answer : A, Explanation :  Automatic stabilizers are policies that automatically stabilize economic activity without the need for additional action from policymakers. Unemployment insurance is an example of an automatic stabilizer because it helps to stabilize the economy during recessions by providing support to individuals who have lost their jobs. As more people become unemployed during a recession, the government spends more on unemployment insurance, which helps to stimulate demand in the economy and soften the impact of the recession.

Which of the following is an automatic stabilizer?

A) Unemployment insurance
B) Government spending
C) Net taxes
D) The interest rate
E) The minimum wage set by the government

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