Automatic stabilisers are government programs that tend to push the federal budget toward deficit as the real GDP rises and toward surplus as the real GDP falls.

Question

Quizplus · Accepted Answer

Automatic stabilizers work by increasing government spending or decreasing taxes as real GDP falls, and decreasing government spending or increasing taxes as real GDP rises, thus helping to stabilize economic fluctuations without new legislative action.

Automatic Stabilisers Are Government Programs That Tend to Push the Federal