Question #69

The automatic stabilisers

• operate to attenuate the business cycle in both directions but usually require discretionary spending adjustments to ensure full employment.
• will always get the budget back into balance because once growth resumes tax revenue rises and welfare spending falls.
• will always ensure that the economy will approach full employment because if spending is below potential tax revenue will keep falling and welfare spending rising.

Answer #659

Answer: operate to attenuate the business cycle in both directions but usually require discretionary spending adjustments to ensure full employment.

Explanation

Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.