Question

Automatic stabilizers are provisions in the law that create automatic ______ in government spending or ______ in taxes when real output declines.

Answer 1

increase

decrease

Step-by-step explanation:

Automatic stabilizers are provision in the law that automatically stabilise government spending and tax rate to stabilise the economy.

When output is falling, in order to prevent the economy slipping into a recession, the automatic stabilisers increase government spending and reduce taxes. These increases money supply