AP MacroeconomicsFiscal Policy
Automatic Stabilizers
Automatic stabilizers are features of fiscal policy that adjust without new legislation to dampen the business cycle.
Examples include progressive income taxes and transfer programs like unemployment benefits. In a downturn, taxes fall and transfers rise, automatically supporting demand; in a boom the reverse cools the economy. They moderate fluctuations without policy lags.
Interactive graph
Fiscal Policy →
Drag the curves and see it for yourself.
Study module
Fiscal Policy →
Full lesson, practice questions, and flashcards.