Multiplier Effect and Automatic Stabilizers
Which of the following is a similarity between the multiplier effect and automatic stabilizers regarding their impact on economic fluctuations?
A
Both mechanisms rely solely on changes in government spending and ignore private sector behavior.
B
Both mechanisms amplify initial changes in spending through subsequent rounds, thereby stabilizing the economy over time.
C
Both mechanisms require explicit legislative changes to be activated in response to economic shifts.
D
Both are designed to reduce the long-run impact of fiscal policy on sustained economic growth.
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