CourseCourseConceptConceptDocsDocuments

AP Macroeconomics Pol 1 C a Define Automatic Stabilizers B Explain How Automatic Stabilizers Moderate Business Cycles Questions

Explain how taxes and transfer payments respond automatically to changing income, moderating recessions and expansions without new legislation.

Syllabus
Effective Fall 2022
Course
AP Macroeconomics

Exam points

  • distinguish automatic taxes and income-sensitive transfers from discretionary policy changes
  • explain how falling tax revenue and rising transfers support disposable income and consumption in a recession
  • explain how rising tax revenue and falling transfers restrain disposable income and consumption in an expansion
  • trace automatic tax and transfer changes into a recession budget deficit or an expansion budget surplus
  • explain why enforcing a balanced budget can amplify a recession instead of stabilising it

AP Macroeconomics Pol 1 C a Define Automatic Stabilizers B Explain How Automatic Stabilizers Moderate Business Cycles Questions question 1

[Maximum number: 1]

Assume that Nepal is in long-run macroeconomic equilibrium and has an open economy.

Assume instead that no discretionary policy actions are taken. Explain how automatic stabilizers in the short run would reduce the effect of the change in real output shown on your graph in part B.

\section*{ \\ }

All question bank results loaded