Automatic stabilisers are:
A) state expenditures and revenues.
B) similar to discretionary fiscal policy.
C) federal expenditures and tax revenue that changes over the course of the business cycle.
D) mechanisms allowed to accelerate the boom and amplify the recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers are federal expenditures and tax revenue that change automatically over the course of the business cycle. They help stabilize the economy by increasing government spending and lowering taxes during a recession, and decreasing spending and increasing taxes during an expansion. They are different from discretionary fiscal policy, which involves deliberate changes in government spending and taxes in response to economic conditions. Automatic stabilizers also do not amplify the recession or accelerate the boom, as they work to counteract the natural fluctuations in the economy.

Automatic Stabilisers Are