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      Question

      Which of the following is an automatic stabilizer in

      macroeconomics?
      A Discretionary fiscal policy Correct Answer Incorrect Answer
      B Progressive income tax Correct Answer Incorrect Answer
      C Open market operations Correct Answer Incorrect Answer
      D Fixed government expenditure Correct Answer Incorrect Answer

      Solution

      Solution: Automatic stabilizers work without explicit government action. A progressive tax system automatically reduces disposable income during booms and increases it during recessions, moderating fluctuations in aggregate demand. Discretionary policies require active implementation.

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