The main reason why automatic stabilizers of the economy do not impact the economic curve, such as demand, is due to the fact that they are incorporated in the curve itself. In other words, they are constantly present and effectual, meaning that they are not switched on or off as other measures. Therefore, the notion that these stabilizers are always at work and their impact only perceptible and significant during major fluctuation is the reason why this is true. Two examples of automatic stabilizers provided in the text are transfer payments and personal income taxes (“Fiscal policy and stabilizers,” n.d.). The text did not include corporate taxes as a form of automatic stabilizer, which can also help cushion the businesses from GDP changes. United States economy underwent major fluctuations in the past two years due to the COVID-19 pandemic and related lockdown measures.
I would consider implementing fiscal policies, such as universal basic income or UBI proposed by Andrew Yang, in order to help Americans to escape the depth of severe poverty imposed by the virus. The main reason is that the payments made during the initial months of the pandemic worked and helped the majority of the population. It has the potential to replace all the currently established transfer payment programs under a single transfer payment institution of UBI. The multifaceted use of a wide range of social programs creates a strong level of dependency in the population on the government. In contrast, UBI ensures the government only appears once and provides only one form of support to the public. Under the UBI framework, the government no longer becomes involved in determining what categorizes as unemployment, single parenthood, or poverty but rather provides a disposable income for everyone creating a universal automatic stabilizer for the economy.
Reference
Fiscal policy and stabilizers.(n.d.). Web.