Automatic stabilizers

Definition

Automatic stabilizers are government policies or programs that automatically adjust to stabilize the economy during economic downturns or expansions, without the need for additional legislative action.

Related terms

Fiscal policy: Fiscal policy refers to the use of government spending and taxation to influence the overall health of the economy.

Economic activity: Economic activity refers to any action involving production, distribution, or consumption of goods and services within an economy.

Expansionary fiscal policy: Expansionary fiscal policy involves increasing government spending or reducing taxes to stimulate economic growth during a recession.