B ) Adjust to pay the cost of living, is the correct option.
Automatic Stabilizers are government spending and taxes which automatically increase or decrease with the business cycle or the spending and tax changes that increase or decrease over the business cycle without any action by the government. The example of automatic stabilizers is unemployment insurance payments which rise because of layoffs in a recession and falls as the employment increases in the expansion phase of the business cycle.
Income taxes also have this effect, as when income fells people have to pay less in incomes. The automatic stabilizer government programs tends to reduce the fluctuations in the GDP automatically.
In the late 1970s. The rate of inflation was very high, exceeding 10% in 1979 and 1980, so the Federal Reserve used tight monetary policy to raise interest rates, with the federal funds rate rising from 5.5% in 1977 to 16.4% in 1981.