Structures in the economy increase aggregate demand when the economy is in recession and decrease aggregate demand when the economy is inflationary are known as:
A) tax transfers.
B) automatic stabilizers.
C) accelerators.
D) depreciation.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government programs and policies that automatically adjust to variations in economic activity without any action needed by policymakers. They help stabilize the economy by increasing aggregate demand during recessions (e.g. unemployment benefits) and decreasing aggregate demand during inflationary periods (e.g. progressive income taxes). Tax transfers, accelerators, and depreciation are not synonymous with automatic stabilizers.

Structures in the Economy Increase Aggregate Demand When the Economy