Revenue and expenditure items in the federal budget that automatically change with the economy in such a way as to make GDP less stable are known as
A) line-item shocks.
B) crowding-out imbalancers.
C) automatic destabilizing policies.
D) eradication enhancers.

Question

Quizplus · Accepted Answer

Revenue and expenditure items in the federal budget that automatically change with the economy are called automatic stabilizers. However, if these automatic stabilizers increase the instability of GDP, then they are known as automatic destabilizing policies. The term "line-item shocks" does not accurately describe this concept. "Crowding-out imbalancers" and "eradication enhancers" are not relevant terms in this context.

Revenue and Expenditure Items in the Federal Budget That Automatically