Which of the following is an example of an automatic stabiliser in the economy?
A. Discretionary government spending
B. Open market operations
C. Change in repo rate
D. Progressive income tax
Answer: Option D
Solution (By JKSSB Mock Tests)
Automatic stabilisers are features of the fiscal system that automatically dampen economic fluctuations without new legislation. Progressive income tax reduces disposable income during booms and increases it during recessions.
Explanation:
Regional disparities in development and persistent unemployment (especially youth and disguised unemployment) remain significant challenges for the Indian economy.
Explanation:
The Stolper-Samuelson theorem states that a rise in the relative price of a good increases the real return to the factor used intensively in that good and reduces the real return to the other factor.
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