Asked by Syecia Johnson on May 21, 2024
Verified
Because of automatic stabilizers,disposable income varies proportionately less than real GDP during periods of economic fluctuations.
Automatic Stabilizers
Economic policies and programs designed to offset fluctuations in a nation's economic activity without additional intervention by the government or policymakers, such as progressive taxes and unemployment benefits.
Real GDP
Stands for Real Gross Domestic Product, which measures the value of all final goods and services produced within a country in a given period, adjusted for inflation.
- Identify the function and instances of automatic stabilizers in mitigating economic volatility.
Verified Answer
AJ
Alwyn JosephMay 28, 2024
Final Answer :
True
Explanation :
Automatic stabilizers, such as progressive income taxes and unemployment benefits, help to stabilize disposable income and soften the impact of economic fluctuations on households. As a result, disposable income tends to vary proportionately less than real GDP during economic downturns and upswings.
Learning Objectives
- Identify the function and instances of automatic stabilizers in mitigating economic volatility.