Which of the following does not function as an automatic stabiliser?
A)Unemployment benefit payments.
B)Government expenditure on road building programs.
C)The Goods and Services Tax (GST).
D)The personal income tax system.

Question

Quizplus · Accepted Answer

Automatic stabilizers are those government policies that counteract economic fluctuations without direct intervention from policymakers. They work by increasing government spending and/or reducing taxes during an economic downturn and decreasing spending and/or increasing taxes during a boom. Unemployment benefit payments, the personal income tax system, and the GST are all automatic stabilizers as they have an impact on aggregate demand and help stabilize the economy. However, government expenditure on road building programs is not an automatic stabilizer as it does not change automatically with changes in the business cycle. It requires direct intervention from policymakers to implement such programs.

Which of the Following Does Not Function as an Automatic