Which of the following describes the operation of automatic fiscal stabilisers during a significant downturn in economic activity?
A discretionary increase in government capital expenditure on infrastructure to boost aggregate demand
An automatic rise in government spending on welfare benefits and a decrease in tax revenues, causing the budget deficit to widen
An automatic fall in transfer payments and a rise in progressive tax receipts, causing the budget surplus to increase
An automatic reduction in interest rates by the central bank to encourage commercial bank lending and consumption
68 exam-style questions on OCR A Level Economics Fiscal policy. Each one has a worked solution and a mark scheme showing where the marks go.