Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that:
A) Reinforce changes in GDP
B) Help offset changes in GDP
C) Produce a cyclically-adjusted budget
D) Produce a standardized budget

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment benefits and progressive taxation, help offset changes in GDP by providing additional government spending during economic downturns and reducing government spending during economic upturns. This occurs without any additional legislative action, as these stabilizers are built into the existing government programs and tax code.

Automatic Stabilizers Smooth Fluctuations in the Economy Because They Produce