Which of the following best defines automatic stabilizers?
A) changes in taxes or government spending that increase the lags caused by fiscal policy
B) changes in taxes or government spending that shift aggregate demand without requiring active policies
C) changes in taxes or government spending that policymakers quickly agree to implement
D) any change in taxes or government policies

Question

Quizplus · Accepted Answer

Automatic stabilizers refer to changes in taxes or government spending that occur automatically without the need for new legislation. These changes occur in response to changes in income or economic conditions and help stabilize the economy. They are often contrasted with active fiscal policy, which requires deliberate action on the part of policymakers. Option B is the only choice that accurately describes automatic stabilizers.

Which of the Following Best Defines Automatic Stabilizers