Which of the following would be considered an automatic stabilizer?
I. Federal Reserve policy -
II. government payrolls -
III. public works projects -
Click on the arrows to vote for the correct answer
A. B. C. D. E. F.B
An automatic stabilizer is anything that would decrease the government budget surplus during slow economies and increase the surplus during strong economic periods. Federal Reserve policy is not automatic, its directed. Government payrolls do not inherently increase or decrease during economic periods. Similarly, public works projects would not automatically increase due to an economic slowdown.