Question

During normal​ times, fiscal policy probably achieves most of its impact through A. the workings of automatic stabilizers. B. the workings of discretionary fiscal policy. C. the workings of time lags. D. It is always ineffective.

Answer 1

The correct answer is A) the workings of automatic stabilizers.

During normal times, the fiscal policy probably achieves most of its impact through the workings of automatic stabilizers.

In fiscal terms, the automatic stabilizer compensates for probable fluctuations that could hurt the economy of the country. This fiscal policy does not require the special authorization of the government.

The government can adjust taxation in order to preserve internal consumption or income. This kind of decision is often used to prevent or solve threats of economic recession.