Which of the following is an important automatic fiscal stabilizer in the Canadian economy?
A)the exchange rate
B)the marginal propensity to consume
C)the marginal propensity to import
D)the income-tax system
E)government purchases of goods and services

Question

Quizplus · Accepted Answer

The income-tax system is an important automatic fiscal stabilizer in the Canadian economy as it is designed to decrease the tax burden during economic downturns and increase it during boom times. This helps stabilize aggregate demand by putting more money into people's pockets during a recession and reducing it during inflationary periods.

Which of the Following Is an Important Automatic Fiscal Stabilizer