"Automatic fiscal stabilization" in the economy refers to
A)all discretionary fiscal policies.
B)the discretionary fiscal policies that are automatically undertaken by the government when there is an inflationary gap.
C)the discretionary fiscal policies that are automatically undertaken by the government when there is a recessionary gap.
D)the properties of government spending and taxation that cause the simple multiplier to be increased.
E)the properties of government spending and taxation that cause the simple multiplier to be reduced.

Question

Quizplus · Accepted Answer

Automatic fiscal stabilization refers to the built-in features of government spending and taxation that help stabilize the economy by reducing the simple multiplier effect, thereby dampening economic fluctuations without the need for new legislative action.

"Automatic Fiscal Stabilization" in the Economy Refers to