Question

Automatic stabilizersa.increase the problems that lags cause in using fiscal policy as a stabilization tool. b.are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession. c.are changes in taxes or government spending that policy makers quickly agree to when the economy goes into recession. d.All of the above are correct.

Answer 1

B). Are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession.

Step-by-step explanation:

Automatic stabilizers are described as the kind of fiscal policy that particularly involves regulating income tax and government spending that assist in offsetting the fluctuations occurring in the economy automatically without any additional governmental operation or action. Thus, the automatic stabilizers are 'changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession' and hence, option B is the correct answer.