question archive Cost-of-living escalators in government contracts and pensions

Cost-of-living escalators in government contracts and pensions

Subject:EconomicsPrice:2.86 Bought5

  • Cost-of-living escalators in government contracts and pensions.
  • Free university tuition for unemployed workers after six months of unemployment, provided that they are under 30 years old and have had five or more years of full-time work experience since high school.

Why these 2 can not be automatic stabilizers? What specifically disqualify them?

 

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Automatic stabilizers are type of fiscal policy meant to offset fluctuations in an economy through normal operation of the economic activities without government involvement

Step-by-step explanation

The cost-of-living escalators in government contracts and pensions and free university tuition for the unemployed workers cannot be automatic stabilizers because they involve government input. The government must part with given amount for the services to operate. The fact that the government is involved through financing of such services disqualifies them from being automatic stabilizers