Which of the Following Is NOT an Automatic Stabilizer

question 136

Multiple Choice

Which of the following is NOT an automatic stabilizer?

• A)A change in the tax rate to fight a recession.
• B)A decrease in tax collections due to a recession.
• C)Decreased unemployment benefits as the economy expands.
• D)Increased public assistance payments during a recession.
• E)All of the choices are correct

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Definitions:

Induced Consumption

The portion of consumer spending that varies with changes in disposable income, suggesting that as people earn more, they spend more.

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting the basic level of consumption that does not vary with disposable income.

Disposable Income

Monetary provision for households to engage in saving and spending after the imposition of income taxes.

Induced Consumption

Refers to the portion of consumer spending that changes in response to changes in income levels, typically increasing as disposable income rises.