ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Discretionary fiscal policy means the government make changes to tax rates and or levels of government spending. For example, cutting VAT in 2009 to provide boost to spending. Expansionary fiscal policy is cutting taxes and/or increasing government spending.
Detailed explanation-2: -a tax decrease passed into law by Congress is an example of a discretionary fiscal policy used to correct a recessionary gap.
Detailed explanation-3: -Discretionary Fiscal Policy: government spending and tax changes enacted at the time of the problem to alter the economy. Nondiscretionary Fiscal Policy: that set of policies that are built into the system to stabilize the economy (sometimes called automatic stabilizers)
Detailed explanation-4: -Which of the following would be considered a fiscal policy action? A tax cut is designed to stimulate spending during a recession. increasing government purchases or decreasing taxes.