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In a recession automatic stabilizers such as unemployment compensation work by?

In a recession automatic stabilizers such as unemployment compensation work by?

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Answer-In a recession, unemployment rate is very high. Unemployment compensation can be a very helpful stabiliser during recession to help the community and the economy as a whole. When people get unemployment allowance, they usually spend the money which implies creation of aggregate demand in the economy. When demannd us created, factories are encouraged to produce more, workers get their wages, income increases and then demand increases more. This helps in booting economic activities and thereby increasing economic growth.

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