Automatic Stabilizer

These are policies put into place to offset economic fluctuations, used to increase and decrease spending as income rises or decreases. Some examples are unemployment insurance (money is taken out in good times so that people aren't wearing wine barrels instead of The Gap), progressive taxes (the rich/hard working/talented people get taxed at a higher rate than less-talented, less-hard working people so that the lower rungs don't starve in bad times) and food stamps (charitable donations for the very poorest in society).

Stabilizers soften the blow of economic shocks. Does it help? Sure, it does. Automatic stabilizers helped during the Mortgage Crisis in 2007-2010 (super low interest rates), which ultimately led to recession. How did it help? It offered economic stimulus, which helped strengthen economic activity. Automatic stabilizers stimulate the economy when it’s in trouble.