Automatic stabilizers result in _____ fluctuations in aggregate demand for given changes in spending than would be the case for an economy in which automatic stabilizers did not exist.

Question

Quizplus · Accepted Answer

Automatic stabilizers such as unemployment benefits and progressive income tax systems help to stabilize aggregate demand during economic fluctuations. They act as a buffer to absorb fluctuations in spending and income, which reduces the volatility of aggregate demand. Therefore, for a given change in spending, an economy with automatic stabilizers would have smaller fluctuations in aggregate demand than an economy without them.

Automatic Stabilizers Result in _____ Fluctuations in Aggregate Demand for Given