Automatic stabilizers are not subject to all the same time lags to which discretionary fiscal policy is subject.

Question

Quizplus · Accepted Answer

Automatic stabilizers are built-in features of the tax and transfer systems that automatically respond to changes in economic conditions, without requiring a specific policy action. They can provide quick and timely stimulus or restraint to the economy, without the time lags associated with discretionary fiscal policy.

Automatic Stabilizers Are Not Subject to All the Same Time