ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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change of cash rate each month
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the budget outcome
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progressive tax scheme
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None of the above
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Detailed explanation-1: -Progressively graduated corporate and personal income taxes and payment schemes, such as unemployment insurance and welfare, are the known automatic stabilisers. Automatic stabilisers are so-called because they serve to regulate economic cycles and are triggered automatically without further government action.
Detailed explanation-2: -The most prominent automatic stabilizers are taxes, unemployment insurance (UI), the Supplemental Nutrition Assistance Program (SNAP), and Medicaid.
Detailed explanation-3: -The best-known automatic stabilizers are progressively graduated corporate and personal income taxes, and transfer systems such as unemployment insurance and welfare.
Detailed explanation-4: -Taxes work as an automatic stabilizer by increasing disposable income in downturns and decreasing disposable income during booms.
Detailed explanation-5: -The action by the government to raise income taxes aimed at reducing excess is not an automatic stabilizer. It is a discretionary fiscal policy.