Question

Automatic stabilizers are fiscal policy measures that A. do not require new legislation. B. are determined by the Federal Reserve System. C. are part of discretionary fiscal policy. D. must be determined by the Congress in each budget.

Answer 1

Answer: A. do not require new legislation.

Step-by-step explanation:

Fiscal policy refers to measures used by the governments to stabilize the economy. Automatic stabilizers are part of this policy and as the term implies, they are automatic. They kick in when the economy is overheated to cool it down or when there is a recession to boost it.

They therefore require no new legislation because they have already taken effect. Automatic stabilizers are useful because they are not affected by the time lag it takes between the time new fiscal policy is announced and the time it actually take effect.