_____ are elements of fiscal policy that automatically change in value as national income changes.
A)Statistical discrepancies
B)Exchange rates
C)Budget deficits
D)Automatic stabilizers
E)Supply-side shocks

Question

Quizplus · Accepted Answer

Automatic stabilizers are elements of fiscal policy that automatically change in value as national income changes. These stabilizers include transfer payments, progressive taxation, and unemployment benefits. As national income decreases during a recession, transfer payments and unemployment benefits increase automatically, and taxes decrease automatically, providing a "stabilizing" effect on the economy. Conversely, as national income increases during a boom, transfer payments and unemployment benefits decrease automatically, while taxes increase automatically, moderating the boom.

_____ Are Elements of Fiscal Policy That Automatically Change in Value