Deliberate changes in government expenditures and taxes to influence GDP
A) are discretionary fiscal policy.
B) are enacted by the Council of Economic Advisers.
C) are examples of automatic fiscal policy because the politicians automatically respond.
D) operate without time lags.

Question

Quizplus · Accepted Answer

Deliberate changes in government expenditures and taxes to influence GDP are discretionary fiscal policy because they involve deliberate choices by policymakers. They are not enacted by the Council of Economic Advisers, which provides advice to the President on economic matters. They are not examples of automatic fiscal policy, which refers to changes in government spending or taxes that occur automatically in response to changes in economic conditions, without the need for legislative action. Finally, discretionary fiscal policy does operate with time lags, as it takes time for changes to be implemented and for their effects to be felt in the economy.

Deliberate Changes in Government Expenditures and Taxes to Influence GDP