Question

the decrease in government spending on food stamps to low income families during an expansion is an example of

Answer 1

An automatic stabilizer is, for instance, a cut in the government's expenditure on food stamps for low-income households during an expansion.

Automatic stabilizers are a particular kind of fiscal policy intended to balance out changes in a country's economic activity through their regular functioning without extra, timely authorization by the government or policymakers.

The most well-known transfer programs, include unemployment insurance and welfare, and gradually graded corporate and personal income taxes. The reason they are named automatic stabilizers is that they function to stabilize economic cycles and are automatically initiated without further government intervention.

Automatic stabilizers can also be used to "cool off" a booming economy or fight inflation, but their main purpose is to mitigate negative economic shocks or recessions. By nature, these policies drain more money from the economy through taxes during times of quick economic expansion and higher salaries.

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