An example of a built-in automatic stabilizer for the Canadian economy is:
A)the tax system.
B)the market interest rate.
C)consumption expenditure.
D)investment spending.

Question

Quizplus · Accepted Answer

The tax system is a built-in automatic stabilizer because during an economic recession, people's incomes go down and as a result, they pay less in taxes. This in turn can help to stimulate the economy as people have more disposable income to spend. Similarly, during an economic boom, people's incomes go up and they pay more in taxes, which helps to slow down the economy and prevent inflation. Therefore, the tax system acts as a stabilizer that adjusts automatically to changes in the economy. The other options - market interest rate, consumption expenditure, and investment spending - are not automatic stabilizers.

An Example of a Built-In Automatic Stabilizer for the Canadian