Which of the Following Scenarios Is an Example of an Automatic

Multiple Choice

Which of the following scenarios is an example of an automatic stabilizer?

A) Increased unemployment rates cause the government to pay out more in unemployment insurance.
B) Tax revenues increase due to a rise in nominal income during an economic expansion.
C) Unemployment rates are reduced during an economic expansion and so government spending on TANF payments decreases.
D) All of these scenarios exemplify automatic stabilizers.