Built-in stabilizers can do what to swings in real GDP?

Multiple choice question.

Eliminate swings in real GDP

Dampen swings in real GDP

Increase the swings in real GDP

No effect on real GDP

1 answer

The correct answer is:

Dampen swings in real GDP

Built-in stabilizers, such as progressive taxation and social welfare programs, tend to moderate fluctuations in economic activity by automatically increasing or decreasing fiscal support in response to changes in real GDP.