2 min readโขdecember 17, 2021
The economy is almost constantly faced with an output gap that results in output being either above or below the level of equilibrium output. This is as a result of the business cycle, which fluctuates as time passes.ย
The government uses either contractionary or expansionary fiscal policies to bring output levels back to equilibrium output. However, there are also factors known as automatic stabilizers that automatically help the economy reach equilibrium output regardless of government action.
2 min readโขdecember 17, 2021
The economy is almost constantly faced with an output gap that results in output being either above or below the level of equilibrium output. This is as a result of the business cycle, which fluctuates as time passes.ย
The government uses either contractionary or expansionary fiscal policies to bring output levels back to equilibrium output. However, there are also factors known as automatic stabilizers that automatically help the economy reach equilibrium output regardless of government action.
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