Fiscal policies that help an economy in a recession without deliberate actions by policymakers are called:
A) consumption smoothers.
B) Ricardian equalizers.
C) automatic stabilizers.
D) multiplier effects.

Question

Quizplus · Accepted Answer

Automatic stabilizers are built-in fiscal policies that automatically stabilize the economy during a recession without any deliberate action by policymakers. For example, during a recession, the government automatically collects less revenue in taxes (such as income taxes and corporate taxes) due to lower economic activity. Additionally, more people become eligible for welfare and other government assistance programs, which help to stimulate demand and stabilize the economy. These policies are automatic because they are built into the tax and welfare system and do not require any new legislation to be passed by policymakers.

Fiscal Policies That Help an Economy in a Recession Without