Which of the following is an automatic stabilizer?

a. military spending
b. spending on public schools
c. unemployment benefits
d. spending on the space station
e. All of the above are automatic stabilizers.

1 answer

The correct answer is: c. unemployment benefits.

Automatic stabilizers are economic policies and programs that automatically help stabilize the economy by increasing or decreasing government spending and taxes based on the economic circumstances, without the need for explicit government action. Unemployment benefits automatically increase during economic downturns when more people lose their jobs, providing a buffer to the economy. The other options, like military spending, public school spending, and spending on the space station, do not automatically adjust based on economic conditions in the same way.