Which of the following is an automatic stabiliser in the fiscal system?
A. Discretionary increase in infrastructure spending
B. Progressive income tax structure
C. Change in repo rate by the central bank
D. One-time stimulus package
Answer: Option B
Solution (By JKSSB Mock Tests)
Progressive income taxes automatically increase the tax burden during expansions and reduce it during contractions, stabilising disposable income without new legislation.
Explanation:
Economic planning in developing countries typically aims at accelerating growth, reducing poverty, promoting equity and modernising the economic structure.
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