With automatic stabilizers, attempts to balance the government budget during a recession will automatically stabilize the economy at potential GDP.

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Quizplus · Accepted Answer

Automatic stabilizers can help mitigate the impact of a recession by increasing government spending and reducing taxes automatically, which can boost aggregate demand and help stabilize the economy. However, they may not be enough to fully stabilize the economy at potential GDP and balancing the government budget during a recession can actually worsen the recession.

With Automatic Stabilizers, Attempts to Balance the Government Budget During