Automatic stabilizers reduce the multiplier effects from demand shocks.

Name: Automatic stabilizers reduce the multiplier effects from demand shocks.
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Automatic stabilizers, such as unemployment benefits and progressive taxation, help to moderate the fluctuations in an economy by automatically increasing spending during downturns and reducing spending during upturns, thus reducing the multiplier effect of demand shocks.

Automatic Stabilizers Reduce the Multiplier Effects from Demand Shocks