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An automatic stabiliser is a tax or form of government expenditure that has the effect of reducing the size of business cycle fluctuations the tendency for inflation to fall as unemployment rises a monetary or fiscal policy that aims to smooth out the business cycle a policy for growth of an economy where the current account is kept in balance

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Answer #1

The correct answer is Option (A) A tax or a form of government expenditure that has the effect of reducing the size of business cycle fluctuations.

Explanation - Automatic Stabilizer can be defined as an economic policy that is designed in order to smooth out fluctuations in economic activity. It is known as automatic stabilizer as the policy action is without direct intervention by policymakers or the government. Depending on the phase of the business or economic cycle, these automatic stabilizers are triggered automatically.

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