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Supporters of Policy Rules Argue That Automatic Stabilizers Are Sufficient

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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.


Definitions:

Right To Understand

The principle that individuals should have access to clear and understandable information about matters that affect their rights and interests.

Task Performance

The execution or accomplishment of a specific work-related or cognitive activity.

Controlling Injuries

Methods or strategies implemented to prevent, manage, or reduce the severity of bodily harm.

Self-Enhancing Triad

A set of three tendencies that involve an individual's optimistic view of oneself, including overestimating one's positive qualities and achievements.

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