Question

the lockdown period during covid-19 created an environment for the government to use: automatic stabilizers expansionary fiscal policy contractionary fiscal policy a modified fiscal year g

Answer 1

During the COVID-19 pandemic, automatic stabilizers and discretionary fiscal policy were used by governments to mitigate economic downturns caused by high unemployment, despite concerns of long-term budget deficits.

Step-by-step explanation:

The Role of Automatic Stabilizers and Fiscal Policy During Economic Downturns:

During the COVID-19 lockdown, governments worldwide faced significant decreases in economic activity due to high levels of unemployment. This situation activated automatic stabilizers, which are fiscal mechanisms that automatically reduce taxes and increase government spending, such as the disbursement of unemployment insurance, to cushion the economy. Alongside automatic stabilizers, governments also employed discretionary fiscal policy, enacting deliberate tax and spending measures to further address the economic downturn. Regardless of concerns about long-term budget deficits, many economists support the use of larger deficits in the short term to combat the severe economic impact of a recession.