Which type of tax acts as an automatic stabiliser in the economy?

Correct option is D

Proportional income tax
· The best-known automatic stabilizers are progressively graduated corporate and personal income taxes, and transfer systems such as unemployment insurance and welfare.
· Automatic stabilizers are called this because they act to stabilize economic cycles and are automatically triggered without additional government action.
· The proportional tax acts as an automatic stabilizer because it makes disposable income, and thus consumer spending, less sensitive to fluctuations in GDP.