Final answer:
The correct answer is C. Unemployment compensation, which is an automatic stabilizer helping to ease the impact of economic downturns by providing financial support to those who have become unemployed.
Step-by-step explanation:
The correct answer is C. Unemployment compensation. Automatic stabilizers are economic policies and programs designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers.
These stabilizers work quickly; for example, when wages are lower, a smaller amount of taxes is taken from paychecks, and during higher unemployment or poverty levels, government spending in those areas increases as individuals apply for benefits. Unemployment compensation is a type of automatic stabilizer that provides financial assistance to individuals who have lost their jobs, helping to stimulate aggregate demand during recessions and ease the impact of economic downturns.