An increase in the tax rates as a result of a new tax law passed by Congress is an example of
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Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate changes in government spending and taxation to stabilize the economy. Therefore, an increase in tax rates as a result of a new tax law passed by Congress would be an example of discretionary fiscal policy. Option A is incorrect because needs-tested taxing change refers to changes in tax rates based on the income level of the taxpayers. Option B is incorrect because increasing tax rates may actually reduce the government deficit if it leads to increased revenue. Option D is incorrect because government debt and tax rates are not directly related.

An Increase in the Tax Rates as a Result of a New