Automatic stabilizers are changes in fiscal policy that affect __________ without the need for explicit action by policy makers.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as changes in taxes and transfer payments, work to counteract fluctuations in the business cycle by increasing government spending and decreasing taxes during economic downturns and vice versa during economic upswings. These changes affect aggregate demand without the need for explicit action by policy makers, making choice A the correct answer.

Automatic Stabilizers Are Changes in Fiscal Policy That Affect __________