In the context of fiscal policy, 'Automatic Stabilisers' operate through:
A. Only changes in the monetary base
B. Only discretionary changes in spending
C. Only exchange-rate adjustments
D. Built-in features of the tax and transfer system that dampen fluctuations without discretionary action
Answer: Option D
Solution (By JKSSB Mock Tests)
Automatic stabilisers are elements of the fiscal system—progressive taxes and unemployment benefits—that automatically reduce the amplitude of business-cycle fluctuations without the need for new legislation.
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