In a 2023 publication, the CBO noted that automatic stabilizers “help stabilize the economy automatically [and] also contribute to short-run fluctuations in the deficit, without any legislated changes in tax or spending policies.” The federal budget deficit in 2022 was \($1,376\) billion. The CBO estimated that without the effects of automatic stabilizers, the deficit would have been \($1,309\) billion.

a. How do automatic stabilizers help stabilize the economy?

How do they contribute to fluctuations in the federal budget deficit?

b. Can you tell whether real GDP was above or below potential GDP in 2022? Briefly explain.