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Answer :
Option c. Automatic stabilizers are revenue and spending programs in the federal budget that automatically adjust with the ups and downs of the economy.
Automatic stabilizers automatically adjust revenue and spending programs in response to economic fluctuations, thereby helping stabilize disposable income and real GDP. Examples include income taxes and unemployment benefits. They act without the need for new government actions.
These include mechanisms like income tax rates and unemployment benefits, which change in response to economic fluctuations without the need for new government action.
For instance, during a recession, unemployment benefits increase as more people qualify for aid, while tax revenues decrease because incomes fall. This automatic adjustment helps stabilize disposable personal income, thereby moderating consumption and fluctuations in real GDP. option C.
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