Deficit targeting acts as an automatic stabilizer.

Name: Deficit targeting acts as an automatic stabilizer.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Deficit targeting refers to the policy of setting specific targets for government deficits. This policy can lead to pro-cyclical fiscal tightening during an economic downturn, reducing government spending and potentially exacerbating the recession. Therefore, deficit targeting does not act as an automatic stabilizer, but rather can have destabilizing effects on the economy.

Deficit Targeting Acts as an Automatic Stabilizer