HOW DO AUTOMATIC STABILIZERS WORK? - ProProfs Discuss
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How do automatic stabilizers work?



Asked by Garrison, Last updated: Sep 07, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Heres an example of how automatic stabilization works.when economic times are good: the government collects higher premiums from us,and makes lower transfer payments to individuals, since unemployment claims are low.when economic times are poor: the government decreases the premiums collectedfrom us, and increases the transfer payments to individuals, since unemployment ishigh.the ei account has excess funds that can be drawn upon in those years wherepremiums are lowered and transfer payments are higher. the ei account at the end of2004 was close to $46 billion.total income in the population would decrease when unemployment is rising, becausethere are less people working and collecting a pay cheque.
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