Which of the following statements is correct?
A) Built-in stability only partially offsets ﬂuctuations in economic activity.
B) Built-in stability works in halting inﬂation, but it cannot alleviate unemployment.
C) Built-in stability can be relied on to eliminate completely any ﬂuctuation in economic activity.
D) Built-in stability has eliminated the need for discretionary ﬁscal policy.

Question

Quizplus · Accepted Answer

Built-in stability, which refers to automatic stabilizers such as progressive income taxes and unemployment benefits, can help mitigate fluctuations in economic activity but it does not completely eliminate them.

Which of the Following Statements Is Correct