What Is an Automatic Stabilizer

question 171

Multiple Choice

What is an automatic stabilizer?

• A) It refers to a discretionary policy that is triggered when actual output is not equal to potential output to improve the economy's performance.
• B) It refers to a stabilization program that keeps inflation in check automatically.
• C) It refers to any government program that tends to reduce fluctuations in GDP automatically.
• D) It refers to a government program that is automatically triggered when the economy enters a recession.

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Definitions:

Equilibrium

A state in a market where demand equals supply, and the market clears at a certain price and quantity, leading to no incentive for change.

Market Fluctuation

Variations in market prices and volumes over time, influenced by various factors such as economic indicators, investor sentiment, and world events.

Gains from Trade

The benefits that individuals, companies, or nations achieve by specializing in what they can produce best and trading with others for the remainder of their needs.

Individuals, States, Countries

Entities at different levels of societal organization, ranging from single human beings to sovereign regions and entire nations with their own governance.