Automatic stabilizers are one of the __________ policy tools.
Correct answer: C. Fiscal
- A. Monetary
- B. Trade
- C. Fiscal
- D. Investment
Explanation
Automatic stabilizers, such as progressive taxes and unemployment benefits, change government revenue or spending automatically over the business cycle. They are therefore fiscal rather than monetary or trade-policy tools.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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