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) inventory investment.
C) accelerators.
D) depreciation.
E) automatic stabilizers.

Question

Quizplus · Accepted Answer

Automatic stabilizers are government policies, such as unemployment benefits and progressive taxation, that provide cushioning effects on economic downturns and curbing effects on inflationary periods. These policies do not require legislative action and operate automatically based on the level of economic activity.

Structures in the Economy Increase Aggregate Demand When the Economy