A shock absorber which makes disposable income, and thus consumer spending, less sensitive to fluctuations in GDP is called......

Automatic stabiliser.

The correct answer is Option (1) → Automatic stabiliser.

Automatic stabilisers are economic policies or programs (like taxes and unemployment benefits) that automatically reduce the impact of fluctuations in GDP on disposable income and consumption. They help stabilize the economy without the need for new government action each time.

For example:

• During a recession, taxes fall and unemployment benefits rise, increasing disposable income.

• During a boom, taxes rise and benefits fall, reducing disposable income.