The presence of the automatic stabilizers means an increase in the budget deficit will be automatically experienced during a recession whereas a budget surplus will be automatically experienced during an economic expansion.

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Automatic stabilizers are built into the government's fiscal policy to counteract economic fluctuations. During a recession, automatic stabilizers such as unemployment insurance and welfare benefits increase government spending and decrease tax revenue, resulting in a higher budget deficit. On the other hand, during an economic expansion, automatic stabilizers such as higher tax revenue and lower spending on welfare programs result in a budget surplus.

The Presence of the Automatic Stabilizers Means an Increase in the Budget