Which is regarded as an automatic stabilizer in the economy?
A)interest rates
B)exchange rates
C)the inflation rate
D)the progressive income tax

Question

Quizplus · Accepted Answer

A progressive income tax is regarded as an automatic stabilizer in the economy as it has a built-in mechanism to provide stimulus during times of economic downturns. When incomes fall during a recession, people pay less taxes, leaving more money in their pockets, which they can then spend to boost demand and stimulate the economy. This can help to mitigate the severity of a recession and allow for a faster recovery.

Which Is Regarded as an Automatic Stabilizer in the Economy