Essay
Supporters of policy rules argue that automatic stabilizers are sufficient to reduce the effects of recessions and expansions and have the added advantage of avoiding the lags associated with discretionary policy. Explain, making reference to an aggregate demand inflation diagram, how the automatic stabilizers can influence real GDP and reduce the size of economic fluctuations.
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Automatic stabilizers are the tax and sp...View Answer
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Q1: Suppose the economy is in a boom
Q2: In practice, discretionary fiscal policy has<br>A)been unsuccessful
Q3: Because the government is the official issuer
Q4: Most of the spending in the enacted
Q5: Explain the major trends in the debt
Q7: To determine the size of the automatic
Q8: Most state and local government expenditures are
Q9: Policy rules tend to make the budget
Q10: The third substantial piece of fiscal policy
Q11: If taxes became more progressive, we would