One characteristic of automatic fiscal policy is that it
A) reduces the size of the federal government debt during times of recession.
B) has no effect on unemployment.
C) automatically produces surpluses during recessions and deficits during inflation.
D) requires no legislative action by Congress to be made effective.

Question

Quizplus · Accepted Answer

Automatic fiscal policy refers to changes in government spending and taxation that occur without the need for explicit legislative action. These changes are typically triggered by certain economic conditions, such as changes in GDP or employment levels. Examples of automatic fiscal policy include progressive income taxes, which automatically increase as income rises, and unemployment insurance, which provides additional support during economic downturns.

One Characteristic of Automatic Fiscal Policy Is That It