Question: Read the following excerpt and answer the question below: The United States is experiencing one of the longest periods of economic expansion in its history,

Read the following excerpt and answer the question below: "The United States is experiencing one of the longest periods of economic expansion in its history, but downturns are difficult to predict, giving policymakers reason to worry about whether the country is prepared for the next recession." "Some of the most important tools available to combat a recessionautomatic stabilizersdo not require any government action to take hold. These work without congressional action and inject funds into the economy in the event of a downturn, either through transfer payments or tax reductions. Some examples include progressive income taxation, the Earned Income Tax Credit, unemployment insurance, and the Supplemental Nutrition Assistance Program (SNAP). These programs work as automatic stabilizers because they are tied to income and are implemented when incomes fall. SNAP and UI were effective as automatic stabilizers during the Great Recession. Yet while these programs have previously been effective automatic stabilizers, their effectiveness should be strengthened and improved by congressional action."

Why do we call mechanisms such as proportional income taxes and the welfare system automatic stabilizers? Giving example of an automatic stabilizer, explain carefully how and why it affects fluctuations in output.

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