It is to be noted that the existence of automatic stabilizers means that government spending and government revenue will automatically increase during a recession and automatically decrease during an economic boom.
Automatic stabilizers are economic policies that help smooth out the business cycle by automatically adjusting government spending and revenue in response to changes in economic conditions. They work by increasing government spending and decreasing taxes during a recession, which helps stimulate economic activity and mitigate the negative impacts of the downturn.
Conversely, during an economic boom, automatic stabilizers decrease government spending and increase taxes, which helps reduce inflationary pressures and promote economic stability.
Overall, automatic stabilizers help stabilize the economy by providing a countercyclical response to economic changes, which can help reduce the severity of economic downturns and prevent the economy from overheating.
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