AP®︎ Macroeconomics: Topic 3.9 Flashcards

Master key terms and definitions for Topic 3.9 of AP Macroeconomics – Automatic Stabilizers to help you prep for quizzes and the AP exam.

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Term

Automatic Stabilizers

Definition

Built-in fiscal policies that automatically reduce swings in real GDP, employment, and inflation.

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Automatic Stabilizers
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Built-in fiscal policies that automatically reduce swings in real GDP, employment, and inflation.

POL-1.C
Progressive Income Tax
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A tax system in which higher incomes are taxed at higher marginal rates.

POL-1.C
Tax Revenues in Recessions and Expansions
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They fall when GDP falls, but rise when GDP rises, helping stabilize consumption.

POL-1.CPOL-1.C.2
Transfer Payments as Automatic Stabilizers
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Government payments to households rise in downturns and fall in expansions, cushioning income changes.

POL-1.CPOL-1.C.4
Unemployment Benefits
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Payments to eligible jobless workers that increase automatically during recessions.

POL-1.CPOL-1.C.4
Temporary Assistance for Needy Families (TANF)
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An antipoverty program providing temporary cash assistance to low-income families, especially during downturns.

POL-1.CPOL-1.C.4
Automatic Stabilizers and Budget Balance
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They tend to increase deficits in recessions and increase surpluses or reduce deficits in booms.

POL-1.C
How Automatic Stabilizers Moderate Business Cycles
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They increase spending in recessions and restrain it in booms, reducing extremes.

POL-1.CPOL-1.C.1