ECONOMICS
FISCAL POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
They take time to be implemented
|
|
|
They occur automatically based on the phase of the business cycle we are in.
|
|
|
They must be paid back to the government
|
|
|
Only corporations have access to automatic stabilizers
|
Detailed explanation-1: -Understanding Automatic Stabilizers They put more money back into the economy in the form of government spending or tax refunds when economic activity slows or incomes fall. This has the intended purpose of cushioning the economy from changes in the business cycle.
Detailed explanation-2: -Answer and Explanation: The correct answer is (a) Automatic stabilizers have a similar impact as discretionary fiscal policy but occur automatically, without action by the government. Automatic stabilizers increase aggregate demand during recessions and reduce aggregate demand during expansions.
Detailed explanation-3: -The most important automatic stabilizer (The one with the biggest impact on the economy) is: the tax system.
Detailed explanation-4: -The most important automatic stabilizer is the tax system.