ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In American public finance, discretionary spending is government spending implemented through an appropriations bill. This spending is an optional part of fiscal policy, in contrast to social programs for which funding is mandatory and determined by the number of eligible recipients.

Detailed explanation-2: -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-3: -Discretionary spending is money formally approved by Congress and the President during the appropriations process each year. Generally, Congress allocates over half of the discretionary budget towards national defense and the rest to fund the administration of other agencies and programs.

Detailed explanation-4: -A discretionary expense is a non-essential expense that is incurred by an individual, household, or business. Another way to think of discretionary expenses is to classify them as “wants” instead of “needs.” A common example is when an individual purchases a new smartphone whenever the latest edition comes out.

Detailed explanation-5: -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)