Automatic stabilizers are government programs that:
A) exaggerate the ups and downs in aggregate demand without legislative action.
B) bring expenditures and revenues automatically into balance without legislative action.
C) shift the budget toward a deficit when the economy slows but shift it toward a surplus during an expansion.
D) increase tax collections automatically during a recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers are designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers. When the economy slows down, these mechanisms increase government spending or decrease taxes automatically, leading to a budget deficit. Conversely, during periods of economic expansion, they decrease spending or increase taxes, moving the budget towards a surplus. This helps to moderate the extremes of economic cycles.

Automatic Stabilizers Are Government Programs That