Glossary · Macro · Fiscal policy

Automatic stabilizers

Parts of the budget that soften the cycle without anyone voting: in a recession tax receipts fall and unemployment benefits rise on their own, propping up demand. They act instantly, which is their great advantage over discretionary policy.

Taught in: Fiscal Policy Basics

Related terms

Fiscal policy Business cycle

More from fiscal policy

Budget deficit and national debt Crowding out Marginal propensity to consume (MPC)Policy lags Spending multiplier Tax multiplier

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