An automatic stabiliser is:
A) a fiscal policy that aims to smooth out the business cycle
B) a monetary policy that aims to smooth out the business cycle
C) a tax or form of government expenditure that has the effect of reducing the size of the multiplier
D) the tendency for inflation to fall as unemployment rises

Question

Quizplus · Accepted Answer

Automatic stabilisers are mechanisms like taxes and government spending that automatically adjust to economic conditions, helping to moderate the business cycle without explicit policy changes.

An Automatic Stabiliser Is