How Are Automatic Stabilizers Used To Combat Inflation?
? In today’s economy, there are devices present called automatic stabilizers. Automatic stabilizers, are mechanisms which aid in the correction of an economic problem without the interference of anyone or anything. They are perhaps most useful to combat demand – pull inflation. Demand – pull inflation, is when prices rise because the economy cannot produce enough goods to satiate the economy. An automatic stabilizer, that is beneficial to combat such a problem, is a progressive tax. A progressive tax, is a tax that becomes a higher rate for each increasing level of gross domestic product. If such a tax is present within ….
