The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of
A) lump-sum taxes.
B) automatic fiscal policy.
C) contractionary fiscal policy.
D) discretionary fiscal policy.

Question

Quizplus · Accepted Answer

The tax rebates passed by Congress in 2008 were a part of discretionary fiscal policy, which involves deliberate changes in government spending or taxes to stimulate or slow down an economy. The tax rebates were specifically designed to move the economy more rapidly towards potential GDP by increasing consumer spending through tax refunds. It was not automatic fiscal policy, which involves automatic triggers to government spending or taxes based on economic conditions. The tax rebates were also not lump-sum taxes or contractionary fiscal policy, as they were meant to increase spending rather than decrease it.

The Tax Rebates Passed by Congress in 2008 to Help