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Basic Question 5 of 11
During an economic contraction, automatic stabilizers reduce ______.
B. a budget surplus but increase a deficit
C. a budget deficit but increase a surplus
A. both budget surpluses and deficits
B. a budget surplus but increase a deficit
C. a budget deficit but increase a surplus
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan | Automatic stabilizers do not require any fiscal change or gouvernment expenditure change, the effect is automatic with the economic expansion/recession. |
| Chidinmaiw | thank you danlan, you cleared that up for me |
| polaska | it is equivalent to say that during an economic expansion, they increase a budget surplus and decrease a deficit, isn't it? |
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Tamara Schultz
Learning Outcome Statements
explain the implementation of fiscal policy and difficulties of implementation as well as whether a fiscal policy is expansionary or contractionary
CFA® 2025 Level I Curriculum, Volume 1, Module 3.