Question

Using policy to stabilize the government

Answer 1

Answers B and D are arguments in favor of active stabilization policy by the government. The current tax system is an argument in favor of active stabilization. The Fed lowering interest rates and expanding money supply is an example of active stabilization.

2. Answers A, B, and C are examples of automatic stabilization. Corporate income taxes, personal income taxes, and unemployment benefits are all examples of automatic stabilizers. The income tax schedule changes taxes as wages change to redistribute wealth for businesses and individuals. As people lose their jobs, unemployment benefits can be distributed to help workers afford their previous cost of living so the economy doesn't collapse

Answer 2

Answers B and D are arguments in favor of active stabilization policy by the government. The current tax system is an argument in favor of active stabilization. The Fed lowering interest rates and expanding money supply is an example of active stabilization.

2. Answers A, B, and C are examples of automatic stabilization. Corporate income taxes, personal income taxes, and unemployment benefits are all examples of automatic stabilizers. The income tax schedule changes taxes as wages change to redistribute wealth for businesses and individuals. As people lose their jobs, unemployment benefits can be distributed to help workers afford their previous cost of living so the economy doesn't collapse.