The effectiveness of automatic stabilizers is limited by the fact that

A) Congress usually acts slowly in legislating changes in tax rates.
B) The stabilizers tend to raise the average price level regardless of the phase of the business cycle.
C) The offset that the stabilizers provide to a change in private spending is less than the change in private spending.
D) Transfer payments and subsidies increase during inflation and decrease during recessions.
E) The stabilizers produce budget surpluses during recessions.

Automatic Stabilizers

Economic policies and programs, such as unemployment benefits and progressive taxation, that automatically help stabilize an economy by increasing spending in a downturn and reducing spending in an upswing without additional government action.

Private Spending

Private Spending is the total expenditures by individuals and businesses in an economy, excluding government spending and investment.

Transfer Payments

Payments made by the government to individuals or organizations without requiring any goods or services in return, such as welfare checks or social security.