various answers:An automatic stabiliser is something that acts
to counter fluctuations in GDP, if GDP rises, the stabiliser acts to
dampen this growth, when GDP is falling, the stabiliser acts to increase
it.
Fiscal policy has auomatic stabilisers; taxes, specifically progressive taxes are.
As GDP rises and people earn more, they pay even higher taxes, disposable income's rise is dampened.
As GDP falls, people pay proportionately less in taxes, disposable income falls by less.
policies or institutions (built into an economic system) that automatically tend to dampen economic cycle fluctuations in income, employment, etc., without direct government intervention. For example, in boom times, progressive income tax automatically reduces money supply as incomes and spendings rise. Similarly, in recessionary times, payment of unemployment benefits injects more money in the system and stimulates demand. Also called automatic stabilizers or built-in stabilizers.
No comments:
Post a Comment