ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action
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A tax multiplier
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Changes in taxes or spending that are the result of deliberate changes in government policy.
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None of the above
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Detailed explanation-1: -Discretionary Fiscal Policy – The deliberate manipulation of government purchases, taxation, and transfers in order to promote macroeconomic goals such as full employment, price stability, and economic growth.
Detailed explanation-2: -Definition: discretionary fiscal policy. Deliberate changes in taxes (tax rates) and government spending by Congress to promote full-employment, price stability, and economic growth.
Detailed explanation-3: -Discretionary (one word) policy consists of deliberate changes in government spending and taxation designed to achieve full employment, control inflation, and encourage economic growth. An economy’s (one word) output is also known as full-employment output.
Detailed explanation-4: -In macroeconomics, discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules.