ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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automatic stabilizers are implemented to help the economy
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requires action each time a recession occurs
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interest rates are reduced to zero
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consumers start spending again
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net exports go up
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Detailed explanation-1: -What Is an Automatic Stabilizer? Automatic stabilizers are a type of fiscal policy designed to offset fluctuations in a nation’s economic activity through their normal operation without additional, timely authorization by the government or policymakers.
Detailed explanation-2: -On the contrary, non-discretionary fiscal policy can be defined as a fiscal policy that arises from the government’s design to spend and change taxes. There are no government official activities that determine changes in this policy.
Detailed explanation-3: -There’s two basic fiscal policies. There’s discretionary and non-discretionary fiscal policy. Non-discretionary fiscal policy are the automatic stabilizers, are the laws we have in our books that automatically speed up or slow down the economy without making a new law.
Detailed explanation-4: -Automatic stabilizers are mechanisms built into government budgets, without any vote from legislators, that increase spending or decrease taxes when the economy slows.
Detailed explanation-5: -Progressively graduated corporate and personal income taxes and payment schemes, such as unemployment insurance and welfare, are the known automatic stabilisers.