Questions: The increase in the amount the government collects in taxes when the economy expands and the decrease in the amount the government collects in taxes when the economy goes into a recession is an example of A. automatic monetary policy B. discretionary monetary policy C. discretionary fiscal policy D. automatic stabilizers.

The answer is D. automatic stabilizers.

Automatic monetary policy refers to monetary policy actions that occur without deliberate intervention, typically through mechanisms like interest rate adjustments by central banks. However, this option is not relevant to the question, as it pertains to fiscal policy, not monetary policy.

Discretionary monetary policy involves deliberate actions by a central bank to influence the economy, such as changing interest rates or altering the money supply. This is not related to the automatic changes in tax collection described in the question.

Discretionary fiscal policy involves deliberate changes in government spending or taxation to influence the economy. This is not what the question describes, as it refers to automatic changes in tax collection without deliberate intervention.

Automatic stabilizers are economic policies and programs that automatically adjust with the economic cycle without the need for explicit government intervention. Examples include progressive tax systems and unemployment benefits. When the economy expands, tax revenues naturally increase due to higher incomes, and during a recession, tax revenues decrease. This is exactly what the question describes.