Which of the following describes the role of automatic fiscal policy in the economy? Automatic fiscal policy is discretionary changes to taxes, government spending, and transfers that Congress makes in attempt to improve the economy. Automatic fiscal policy refers to industries that aren't subject to the fluctuations of the economy and therefore moderate the effects of recessions. Food, housing, and the military are examples of these industries which are usually more stable than the rest of the economy. Automatic fiscal policy has a similar impact as discretionary fiscal policy but occur automatically, without action by the government. Automatic fiscal policy increases aggregate demand during recessions and reduce aggregate demand during expansions. Automatic fiscal policy is changes in the money supply that occur automatically when inflation or unemployment occurs.