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This study guide covers automatic stabilizers in macroeconomics, including their definition, how they function during recessions and expansions (like cruise control), examples (e.g., unemployment benefits, welfare programs, progressive income taxes), impact on the economy, common exam question types, and the distinction between automatic and discretionary fiscal policy. It also emphasizes their role in mitigating economic fluctuations without eliminating the business cycle and their connection to budget deficits/surpluses.
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Question 1 of 7
Ready to test your knowledge? 🤔 Which of the following characteristics BEST describes an automatic stabilizer?
Requires constant intervention by the government
Eliminates the business cycle completely
Works without the need for new laws or decisions
Primarily focuses on increasing government debt