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UI Post-UTME Economics 2025 (Model questions) Question 5

Question 5

Public Finance

Which of the following are examples of automatic stabilisers in fiscal policy?
I. Unemployment benefits
II. Progressive income tax
III. Government capital expenditure on roads
IV. Corporate income tax

  1. A.I, II and IV only
  2. B.I and III only
  3. C.II, III and IV only
  4. D.All of the above
Show the answer and explanation

Answer: A (I, II and IV only)

Explanation

Automatic stabilisers change on their own as income changes: benefits and income and company taxes. Spending on roads must be decided by government, so it is discretionary.