What is an automatic stabilizer?

Question

Quizplus · Accepted Answer

An automatic stabilizer refers to any government program or policy that helps reduce the impact of economic fluctuations without the need for explicit government action. These stabilizers can include unemployment insurance, progressive income taxes, and welfare programs that provide income support during economic downturns. These programs work automatically to stabilize the economy by increasing government spending during recessions and decreasing spending during expansions, without requiring new legislation or executive action. Option A refers to discretionary policy and option B is too narrow since the stabilizer refers to more than just inflation control. Option D is incorrect as automatic stabilizers are not programs triggered specifically during economic recessions.

What Is an Automatic Stabilizer