In the context of macroeconomic stabilization policies, which scenario best illustrates the concept of "automatic stabilizers"? a) A government increases spending on infrastructure projects during a recession as part of a deliberate fiscal stimulus package. b) During an economic downturn, unemployment benefits automatically increase as more people become unemployed, providing a buffer to the economy. c) The central bank adjusts the interest rates in response to changes in inflation and unemployment data. d) A government adopts a new policy to increase taxes on high-income earners during periods of economic boom.
In the context of macroeconomic stabilization policies, which scenario best illustrates the concept of "automatic stabilizers"? a) A government increases spending on infrastructure projects during a recession as part of a deliberate fiscal stimulus package. b) During an economic downturn, unemployment benefits automatically increase as more people become unemployed, providing a buffer to the economy. c) The central bank adjusts the interest rates in response to changes in inflation and unemployment data. d) A government adopts a new policy to increase taxes on high-income earners during periods of economic boom.
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 2SQ
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In the context of
stabilization policies, which scenario best illustrates the concept of "automatic stabilizers"?
a) A government increases spending on infrastructure projects during a recession as part of a deliberate fiscal stimulus package.
b) During an economic downturn,
c) The central bank adjusts the interest rates in response to changes in inflation and unemployment data.
d) A government adopts a new policy to increase taxes on high-income earners during periods of economic boom.
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