The presence of automatic stabilisers means an increase in the budget deficit will be automatically experienced during an economic expansion whereas a budget surplus will be automatically experienced during a recession.

Question

Quizplus · Accepted Answer

Automatic stabilizers work by increasing government spending or decreasing tax revenues during a recession, which can lead to a higher budget deficit, and by decreasing government spending or increasing tax revenues during an economic expansion, which can lead to a lower budget deficit or a surplus.

The Presence of Automatic Stabilisers Means an Increase in the Budget