In economics, an automatic stabilizer is a goverment policy of taxes and transfer payments that stabilize GDP without requiring policy-makers to take explicit action. Unemployment benefit is an example of an automatic stabilizer.
In macroeconomicsautomaticstabilisers work as a tool to dampen fluctuations in real GDP without any explicit policy action by the government.
There is broad consensus amongst economists that the automaticstabilisers often exist and function in the short term.
This example shows us how the multplier is lessened by the existence of an automaticstabiliser, and thus helping to lessen the fluctuations in real GDP as a result from changes in expenditure.
Feeds |
Contact