Automatic Stabilizers

Automatic stabilizers are systems set up in order to reduce fluctuations in a country's real GDP, both positive and negative without any overt government action ("Automatic stabiliser," 2008). They are a key part of Keynesian economics. Some of the factors that can destabilize an economy are changes in consumption, investment, or exports. Changes in these factors have a multiple effect on the aggregate demand curve. The point of an automatic stabilizer is to reduce the multiple of the effect

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Category: Economics - A