Which of the following is not a predicted outcome of implementing automatic fiscal policy?О а.Reduces the size of the multiplierO b. Helps prevent inflation due to inflationary gapsO C. Moderates the business cycleO d. Decreases the deficitO e.Reduces the effects of economic shocks

Answered: Which of the following is not a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Which of the following is not a predicted outcome of implementing automatic fiscal policy?
О а.
Reduces the size of the multiplier
O b. Helps prevent inflation due to inflationary gaps
O C. Moderates the business cycle
O d. Decreases the deficit
O e.
Reduces the effects of economic shocks

Expert Solution

Step 1

Automatic fiscal policy, also known as an automatic stabilizer, is a type of fiscal policy that adjusts transfer payment and tax rates automatically to stabilize consumption, income, and spending (business) over the business cycle. An automatic stabilizer helps to tackle recession and economic slumps and was favored by Keynes.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions