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    Question

    Which of the following is NOT an automatic (built-in)

    stabilizer in an economy?
    A Progressive Income Tax Correct Answer Incorrect Answer
    B Unemployment Benefits Correct Answer Incorrect Answer
    C Corporate Profit Tax Correct Answer Incorrect Answer
    D Discretionary Government Spending on Infrastructure Correct Answer Incorrect Answer
    E Welfare Payments Correct Answer Incorrect Answer

    Solution

    Automatic stabilizers are mechanisms that counter economic fluctuations without explicit government intervention. Progressive taxes and transfer payments (unemployment benefits, welfare) automatically increase deficits in recessions and decrease them in booms. Discretionary spending requires a deliberate policy decision and is not automatic.

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