Question

What is an automatic stabilizer?

a. It refers to a discretionary policy that is triggered when actual output is not equal to potential output to improve the economy's performance.
b. It refers to a stabilization program that keeps inflation in check automatically.
c. It refers to any government program that tends to reduce fluctuations in GDP automatically.
d. It refers to a government program that is automatically triggered when the economy enters a recession.

Answer 1

c. It refers to any government program that tends to reduce fluctuations in GDP automatically.

Step-by-step explanation:

Automatic Stabilizer is nothing but any scheme or program that that tends to reduce fluctuations in GDP automatically. It is generally intended to stabilize the GDP of a nation.

For examples In cases of economic slow down, the government sells its ownership in public sectors undertakings like, railways, oil and natural gases, to private players. So, that government has some money to combat the slowdown.