Final answer:
Unemployment insurance is an example of an automatic stabilizer because it provides payments to eligible individuals during periods of high unemployment without the need for new legislation, thereby helping to stimulate aggregate demand during recessions.
Step-by-step explanation:
An automatic stabilizer is a government program that changes automatically depending on economic conditions, without the need for explicit action by policymakers. When economic activity slows down, some government expenditures automatically increase or tax revenues decrease without any new legislation.
Among the choices provided in the question, Unemployment insurance is an example of an automatic stabilizer. This is because during periods of high unemployment, like the events of 2008-2009 and again in 2020, more people qualify for and receive unemployment benefits, which directly aid in stimulating aggregate demand during a recession.
The payments to unemployed individuals happen without new legislative measures, thus fulfilling the criteria of an automatic stabilizer.
In contrast, long-term contracts are not related to fiscal policy, open market operations are conducted by central banks to manage money supply and are not automatic, and price controls are government mandates that do not automatically adjust with economic conditions.