Question

Built-in stabilizers: A. automatically increase the size of deficits when the economy experiences demand-pull inflation B. tend to offset the impact of discretionary fiscal policy C. avoid the problems associated with the administrative lag of discretionary fiscal policy D. automatically produce a budget that is balanced over the business cycle

Answer 1

C. avoid the problems associated with the administrative lag of discretionary fiscal policy

Step-by-step explanation:

Built-in stabilizers are stablizers are fiscal policies that automatically reduce the impact of economic fluctuations.

For example progressive tax is an example of Built-in stabilizers. If the economy is experiencing a downturn, automatic stabilisers is triggered and amount of tax paid is reduced.

discretionary fiscal policy are subject to approval by the government authority. So, it might take time for it to scrutinised and approved. This is an instance of administrative lag.

Built-in stabilizers are not subject to approval before they are implemented.