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Ultimate Flashcard Review
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Automatic Stabilizers
Key Concepts to Understand
Question 1 of 4
What is the key feature of an automatic stabilizer that distinguishes it from discretionary fiscal policy?
It only works to combat inflation, not recessions.
It requires a new bill to be passed by Congress to take effect.
It works to stabilize the economy without new, deliberate action from policymakers.
It only affects the short-run aggregate supply curve.
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
During an economic expansion, the nation's progressive income tax system results in automatically higher tax revenues. This phenomenon is an example of:
Contractionary discretionary fiscal policy
Expansionary discretionary fiscal policy
An automatic stabilizer dampening the expansion
A shift in the long-run aggregate supply curve
The money multiplier effect
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.