The economic impact of ________ during expansionary periods is to moderate growth.

Question

Quizplus · Accepted Answer

Automatic stabilizers such as changes in government spending and taxation that occur automatically in response to economic fluctuations are designed to stabilize the economy during expansionary periods. This moderation in growth helps to prevent overheating and excessive inflation. Implementation lags may actually exacerbate the impact of positive demand shocks during a period of economic expansion. Tax cuts may stimulate demand and lead to increased growth, while positive demand shocks may cause short-term growth spurts, but neither will moderate the overall impact of expansionary periods.

The Economic Impact of ________ During Expansionary Periods Is to Moderate