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Which of the following is an example of an automatic stabilizer?

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Question: Which of the following is an example of an automatic stabilizer?

Options:

  1. Government infrastructure projects
  2. Unemployment benefits
  3. Tax cuts
  4. Public investment programs

Correct Answer: Unemployment benefits

Solution: 

Unemployment benefits are an example of an automatic stabilizer, as they automatically increase during economic downturns to support individuals.

Which of the following is an example of an automatic stabilizer?

Practice Questions

Q1
Which of the following is an example of an automatic stabilizer?
  1. Government infrastructure projects
  2. Unemployment benefits
  3. Tax cuts
  4. Public investment programs

Questions & Step-by-Step Solutions

Which of the following is an example of an automatic stabilizer?
  • Step 1: Understand what an automatic stabilizer is. It is a government policy that automatically helps the economy without needing new laws.
  • Step 2: Identify examples of automatic stabilizers. Common examples include unemployment benefits and progressive taxes.
  • Step 3: Focus on unemployment benefits. These benefits increase when more people lose their jobs during a recession.
  • Step 4: Conclude that unemployment benefits help support individuals financially during tough economic times, making them an automatic stabilizer.
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