Question

Which describes the role of automatic stabilizers in the economy? Automatic stabilizers have a similar impact as discretionary fiscal policy but occur automatically, without action by the government. Automatic stabilizers increase aggregate demand during recessions and reduce aggregate demand during expansions. Automatic stabilizer

Answer 1

Answer: Automatic stabilizers have a similar impact as discretionary fiscal policy but occur automatically, without action by the government.

Explanation: Automatic stabilizers refers to those factors which comes into act automatically when the economy faces any kinds of problems. Usually these includes the tax and transfer systems in the economy that affects the demand and supply of the commodities.

These factors comes into force without the direct intervention of the government.

Hence from the above we can conclude that the correct option is first statement.