Final answer:
Built-in stability refers to the automatic fiscal policies that work to stabilize the economy, where in times of economic downturn, income tax revenues decrease, and transfer payments increase without active government intervention.
Step-by-step explanation:
The concept being discussed here is built-in stability, which refers to the automatic fiscal policies that stabilize an economy without the need for active government intervention. When real GDP decreases, built-in stabilizers automatically cause income tax revenues to decrease and transfer payments to increase. This happens because as people earn less income during an economic downturn, they pay less in taxes, and more people may qualify for government aid programs such as unemployment benefits.