The impact of automatic stabilizers is eliminated by
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Which of the following is an advantage of automatic stabilizers?
a. Because they affect disposable personal income directly, automatic stabilizers act swiftly to reduce the degree of real GDP changes.b. The lag for automatic stabilizers is relatively long.c. It is much easier to measure the impact of automatic stabilizers than the impact of discretionary fiscal policy.d. There is no administrative cost to implementing automatic stabilizer
Explain how taxes and transfer payments act as automatic stabilizers. Do these automatic stabilizers tend to increase or decrease the budget deficit during recessions? What about expansions?