The presence of automatic stabilizers means that the federal deficit is ________ than it otherwise would be in a recession and ________ than it otherwise would be in an expansion.

Question

Quizplus · Accepted Answer

Automatic stabilizers, such as unemployment benefits and progressive tax rates, automatically increase government spending or decrease tax revenue during a recession, leading to a larger deficit. Conversely, they decrease spending or increase revenue during an expansion, resulting in a smaller deficit.

The Presence of Automatic Stabilizers Means That the Federal Deficit