"European Economic Recovery Plan"
"The European Commission urged EU governments to jointly combat the economic slowdown with billion euros ($256 billion) in spending and tax cuts to boost growth and consumer and business con " The plan "...would see the 27 EU governments spend 1.5 percent of the bloc's gross domestic prod halt the slowdown that has already pushed some European nations into recession."
HYPERLINK "http://www.iht.com/" www.iht.com, 11/26/20
Which of the following describe the EU's plan?
i. It is discretionary fiscal policy
ii. It is contractionary fiscal policy
iii. It will generate a cyclical surplus.

Question

Quizplus · Accepted Answer

The EU's plan is discretionary fiscal policy as it involves government spending and tax cuts to boost growth and consumer and business confidence. It is not contractionary fiscal policy as it aims to stimulate the economy. There is no indication that it will generate a cyclical surplus.