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Taxes, the Multiplier Effect, and Automatic Stabilizers
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Taxes, the Multiplier Effect, and Automatic Stabilizers
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20. Fiscal Policy / Taxes, the Multiplier Effect, and Automatic Stabilizers / Problem 2
Problem 2
Why are government purchases not considered automatic stabilizers?
A
Because they automatically adjust based on the business cycle.
B
Because they decrease during economic booms and increase during recessions.
C
Because they remain stable regardless of the business cycle unless changed by discretionary policy.
D
Because they increase during economic booms and decrease during recessions.
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