Automatic stabilizers
A)increase the magnitude of the government expenditure multiplier.
B)decrease the magnitude of the government expenditure multiplier.
C)have no effect on the magnitude of the government expenditure multiplier.
D)reduce the government expenditure multiplier to zero.
E)increase the magnitude of the tax multiplier.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as progressive taxes and unemployment benefits, work to dampen fluctuations in the economy, thereby reducing the magnitude of the government expenditure multiplier by automatically adjusting fiscal policy in response to economic changes.

Automatic Stabilizers