According to the concept of automatic stabilizers, tax receipts automatically increase and transfer payments automatically decrease during economic prosperity, thus slowing the growth of aggregate demand and controlling upward pressure on the price level when the economy is expanding.

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Automatic stabilizers work by increasing tax receipts and decreasing transfer payments (like unemployment benefits) during times of economic prosperity, which in turn reduces disposable income, slows the growth of aggregate demand, and helps control inflationary pressures.

According to the Concept of Automatic Stabilizers, Tax Receipts Automatically