The major advantage of automatic stabilizers is that they
A) guarantee the federal budget will be balanced in a relatively short amount of time.
B) institute countercyclical fiscal policy without the delays associated with legislative action.
C) automatically produce surpluses during recessions and deficits during expansions.
D) require discretionary actions on the part of Congress before they exert an impact on output and employment.

Question

Quizplus · Accepted Answer

Automatic stabilizers are designed to automatically change government spending or taxes in response to changes in the economy, without requiring legislative action. This means that countercyclical fiscal policy can be put into effect quickly in response to changes in the business cycle, without the delays associated with waiting for Congress to pass new legislation. This can help to stabilize the economy and promote economic growth. The other options presented are inaccurate; automatic stabilizers do not guarantee balanced budgets and do not automatically produce surpluses or deficits, and they do not require discretionary actions from Congress.

The Major Advantage of Automatic Stabilizers Is That They