Automatic stabilizers act like:
A)automatic expansionary fiscal policy when the economy is in inflation.
B)automatic expansionary fiscal policy when the economy is in a recession.
C)an additional multiplier effect.
D)automatic contractionary policy when the economy is in a recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers are features of fiscal policy that automatically stabilize fluctuations in the economy without direct intervention by policymakers. They tend to act counter-cyclically, meaning they automatically provide support during recessions and restrain during expansions. Therefore, option B is the correct answer as automatic stabilizers act like automatic expansionary fiscal policy when the economy is in a recession.

Automatic Stabilizers Act Like