Automatic or built-in-stabilzers
- anything that increases the governments budget deficit during a recession and increases it's budget surplus during inflation.
- DOES NOT REQUIRE GOVERNMENT ACTION
- Unemployment compensation, Medicaid, Medicare, Wellfare, VA Benefit, Social Security
- progressive tax system
- Average tax rate (tax revenue/ GDP) rises with GDP
GDP rises = tax rises
- Proportional tax system
-average tax rate remains constants GDP Changes
- Regressive tax system
-average tax rate falls with GDP
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