Figure 13.2

-Refer to Figure 13.2.Assume the economy is initially in equilibrium with real GDP equal to potential GDP.Other things equal,if the economy enters a recession,the inflation rate would ________ and the output gap would ________ if there are,as opposed to are not,automatic stabilizers in the economy.

Question

Figure 13.2

-Refer to Figure 13.2.Assume the economy is initially in equilibrium with real GDP equal to potential GDP.Other things equal,if the economy enters a recession,the inflation rate would ________ and the output gap would ________ if there are,as opposed to are not,automatic stabilizers in the economy.

Quizplus · Accepted Answer

Automatic stabilizers help to cushion the impact of a recession by reducing the severity of the decrease in inflation and the output gap, leading to a smaller decrease in both compared to a scenario without stabilizers.

Figure 13.2 -Refer to Figure 13.2.Assume the Economy Is Initially in Equilibrium