Explore commonly used personal finance terms.
Automatic stabilizers are economic policies, like progressive taxes and unemployment benefits, that adjust automatically with economic conditions, helping moderate the economy without additional government intervention. During a downturn, stabilizers increase government spending or decrease taxes, while in expansionary periods, they reduce spending or increase taxes. These policies help smooth economic cycles, supporting stability by automatically countering fluctuations, thus playing a vital role in fiscal policy and economic resilience.
