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Response Details:
By definition, automatic stabilizers dampen fluctuations in real GDP without explicit governmental policy change. During recessions, the unemployment rate is typically higher than is normal, meaning that there is a surplus amount of labor seeking for jobs. This increase in unemployment is hampered, however, due to the increasing number of young people joining the military, as this decreases the size of the labor pool that is still actively looking for jobs. So rather than producing nothing as the unemployed, these youths are able to participate in the government sector of GDP. In conclusion, military service serves as an automatic stabilizer because it helps to moderate the fluctuations.
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