IBPS PO General Awareness: Fiscal Policy questions with solutions

Q1. Which of the following is considered an automatic stabilizer in fiscal policy?

1. Defense spending
2. Infrastructure investment
3. Corporate tax incentives
4. Unemployment benefits

Answer: Unemployment benefits

Automatic stabilizers are fiscal tools that automatically offset economic fluctuations, such as unemployment benefits and progressive taxes. Unemployment benefits increase during recessions and support demand without new legislation.