AP Macroeconomics / Unit 3: National Income and Price Determination
3.9 Automatic Stabilizers
Notes
Automatic stabilizers change taxes and transfers without new laws: progressive income taxes and unemployment benefits.
- In recessions, taxes fall and transfers rise automatically.
Practice
Which is an automatic stabilizer?
Rises automatically in recessions.
During an expansion, automatic stabilizers:
Leaning against the cycle.
Automatic stabilizers work without:
Built into the system.
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