CIMA BA1 · Chapter 2 · Question 7 of 10
Which of the following is an example of an automatic stabiliser?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A progressive income tax system combined with unemployment benefits
Explanation
Automatic stabilisers change without any new policy decision. As incomes fall in a downturn, progressive tax receipts fall and benefit payments rise, cushioning demand; the reverse happens in a boom. The other options are discretionary policy actions.
More Macroeconomic policy and the business cycle MCQs
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