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 are called automatic because they are usually part of the structural design of government programs.

From your options, "Unemployment benefit payments to the unemployed" acts as an automatic stabilizer.

Here's why:

1. During a recession, when unemployment rates are high, more people will be eligible for unemployment benefits. This increases government spending automatically, which can help to stimulate the economy.

2. Conversely, during an economic boom, when unemployment rates are low, fewer people will be eligible for unemployment benefits. This decreases government spending automatically, which can help to cool down the economy.

So, the correct answer is "Unemployment benefit payments to the unemployed".

Question

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 are called automatic because they are usually part of the structural design of government programs.

From your options, "Unemployment benefit payments to the unemployed" acts as an automatic stabilizer.

Here's why:

1. During a recession, when unemployment rates are high, more people will be eligible for unemployment benefits. This increases government spending automatically, which can help to stimulate the economy.

2. Conversely, during an economic boom, when unemployment rates are low, fewer people will be eligible for unemployment benefits. This decreases government spending automatically, which can help to cool down the economy.

So, the correct answer is "Unemployment benefit payments to the unemployed".

Knowee AI · Accepted Answer

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 are called automatic because they are usually part of the structural design of government programs.

From your options, "Unemployment benefit payments to the unemployed" acts as an automatic stabilizer.

Here's why:

1. During a recession, when unemployment rates are high, more people will be eligible for unemployment benefits. This increases government spending automatically, which can help to stimulate the economy.

2. Conversely, during an economic boom, when unemployment rates are low, fewer people will be eligible for unemployment benefits. This decreases government spending automatically, which can help to cool down the economy.

So, the correct answer is "Unemployment benefit payments to the unemployed".

Which of the following acts as an automatic stabiliser?Group of answer choicesIncreases in government spending on infrastructureInterest rate changesUnemployment benefit payments to the unemployedNone of the other answer options is correct.Reductions in nominal wages as the inflation rates rise

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