Answered: Explain the concept of automatic…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section18.10: Demand-side And Supply Side Views Of The Economy And Government Tools For The Changing Real Gdp

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Explain the concept of automatic stabilizers in fiscal policy and how they function during economic downturns.
A) Automatic stabilizers are government policies that always lead to economic stability.
B) Automatic stabilizers are government programs like unemployment benefits and progressive taxation that automatically kick in during economic downturns to provide support and stabilize the economy.
C) Automatic stabilizers are monetary policies implemented by the central bank to control inflation.
D) Automatic stabilizers have no relevance in fiscal policy.

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