344
MACROECONOMICS
SUMMARY
Automatic stabilizers are expenditures that automatically
increase or taxes that automatically decrease when aggre-
gate income and output decline.
Automatic stabilizers result in a steeper aggregate demand
curve and reduce the variability of output arising from eco-
nomic shocks to aggregate demand.
Discretionary fiscal policy results from deliberate and con-
scious choices by the government on public expenditure and
taxes so as to achieve its macroeconomic goals.
The fiscal deficit is government expenditure that is unrelated to
the repayment of debt,
G
, plus interest payments on the debt,
rB
,
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