Which combination is an example of automatic stabilizers in an economy?
Correct answer: B. Progressive taxes and unemployment benefits
- A. Higher tariffs and lower subsidies
- B. Progressive taxes and unemployment benefits
- C. Fixed exchange rates and export quotas
- D. Public debt and foreign reserves
Explanation
Progressive taxes collect relatively more revenue during expansions, while unemployment benefits support incomes during downturns. These responses occur automatically without a new discretionary policy decision.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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