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Suppose as a professional economist you are asked to take part in a debate about the wisdom of pursuing discretionary fiscal policy versus relying on automatic stabilizers. Outline some of the pros and cons for each side of the debate.ġ. Outline some of the pros and cons for each side of the debate. This content was COPIED from - View the original, and get the already-completed solution here! In sum, they smooth out the business cycle.Not what you're looking for? Search our solutions OR ask your own Custom question. They help those in need during downturns. Why are automatic stabilizers important? (They do not require political action.Why have automatic stabilizers been weakened over time? (Some programs, like unemployment insurance, are often hard to access.What are some examples of automatic stabilizers? (Any of the programs discussed in the lesson.).How are automatic stabilizers different than discretionary fiscal policy? (They do not require the specific approval of Congress or the President.).What is an automatic stabilizer? (A tax or a spending program that tends to stimulate the economy during a recession and slow an economy during a recession.).can become less dependent on discretionary measures to save the day.Ĭonclude by asking the students the following questions. (The automatic stabilizers would be more effective in increasing spending in the economy if more benefits were provided.)ĭisplay Slide 16 and play the embedded video clip then have students respond to the questions in Activity 2.ĭisplay Slide 17 and explain that it offers some suggestions on how automatic stabilizers can be strengthened so the U.S. (Answers will vary, but most will probably realize it is difficult to buy enough food.) Ask students what would happen to the effectiveness automatic stabilizers if programs like SNAP provided more benefits for people in need. Once students have completed the activity, each student should respond individually to the Activity 1 assessment questions.Īsk students if they think SNAP benefits provide adequate funding for families. Have students follow the procedures to shop with their SNAP benefits, fill out their purchase list and create their daily menu. Tables are provided called “Shopping With SNAP” and the “Daily Menu” that will be used to record the decisions made in the Activity. Notes are provided on each slide that provide further guidance.ĭistribute a copy of Activity 1 to each student. They will uncover that automatic or built-in stabilizing forces have been weakened, requiring Congress to legislate remedies.ĭisplay Slides 2-15, explaining the concepts as needed. Possible answers to the bellringer assessment are provided in the answer key.Įxplain to students that they are going to explore the fiscal policy tools the federal government has to reduce the volatility of economic swings. Have them read through the situation and reply to the questions. Tell them the exercise illustrates the purpose, functionality and application of automatic stabilizers in bridging the contractionary phase of the business cycle with the recovery phase. Share the Bellringer activity with the students. The safety net in place to sustain them will be uniquely tested. The post-Covid economy will invariably create challenges that many Americans will adapt to slowly. The recession in the wake of the pandemic has brought enduring hardships on many households that may require extending these stabilizers beyond their normal lifespan. has been compromised by a lack of fiscal and philosophical commitment from government. In the past few decades, the durability of these programs in the U.S. At the first whiff of a contraction, for instance, households experiencing losses of employment and income become eligible for unemployment insurance, SNAP benefits, and other safety nets. Automatic Stabilizers are stop gaps built into our nation’s fiscal policy that immediately engage the moment a swing in the business cycle becomes threatening.
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