Automatic stabilizers smooth ﬂuctuations in the economy because they produce changes in the government's budget that
A) reinforce changes in GDP.
B) help offset changes in GDP.
C) produce a cyclically adjusted budget.
D) produce a standardized budget.

Question

Quizplus · Accepted Answer

Automatic stabilizers are built-in mechanisms in the government's budget that help offset changes in GDP by increasing government spending during economic downturns and decreasing it during economic booms. This ensures that government spending is counter-cyclical and helps to stabilize the economy. Therefore, the correct choice is B, which states that automatic stabilizers help offset changes in GDP.

Automatic Stabilizers Smooth ﬂUctuations in the Economy Because They Produce