Supporters of Policy Rules Argue That Automatic Stabilizers Are Sufficient

question 6

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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Definitions:

Seriously Ill

A condition or state in which an individual is suffering from a severe and life-threatening health problem.

Inpatients

Patients who are admitted to a hospital or clinic and stay overnight or for an extended period for medical care or treatment.

Experimental Group

In research, the group of participants that receives the treatment or intervention being tested, as opposed to the control group which does not.

Depressive Symptoms

Manifestations of depression which can include feelings of sadness, hopelessness, loss of interest in activities, and changes in appetite or sleep.