The Effects of Automatic Stabilizers

Expansionary fiscal policies are intend to boost demand and output in the economy each directly, through greater government costs, or indirectly, through revenue reductions that tend to stimulate private consumption and investment spending.

here(predicate) is an example of an automatic stabilizer: The government pays unemployment and welfare benefits. The bet of unemployed people and those on low incomes who are entitle to these benefits increases in a recession and decreases in a boom.

As a result, gove

According to Walsh, trance the automatic adjustments of federal spending and taxes work to stabilize the economy, not all automatic fiscal adjustments are stabilizing. State

nment expenditure increases automatically in recessions and decreases automatically in a boom.

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