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    Question

    Which of the following is an automatic stabilizer in

    macroeconomics?
    A Discretionary fiscal policy Correct Answer Incorrect Answer
    B Progressive income tax Correct Answer Incorrect Answer
    C Open market operations Correct Answer Incorrect Answer
    D Fixed government expenditure Correct Answer Incorrect Answer

    Solution

    Solution: Automatic stabilizers work without explicit government action. A progressive tax system automatically reduces disposable income during booms and increases it during recessions, moderating fluctuations in aggregate demand. Discretionary policies require active implementation.

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