The distinction between discretionary fiscal policy and the use of automatic stabilizers is that:
A)only discretionary fiscal policy can stimulate the economy.
B)only automatic stabilizers can stimulate the economy.
C)discretionary fiscal policy,once adopted,is built into the structure of the economy.
D)automatic stabilizers,once adopted,are built into the structure of the economy.
E)only discretionary fiscal policy can be used by the federal government.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy involves deliberate changes in government spending and taxation in response to economic conditions, while automatic stabilizers are inherent features of the economy that automatically adjust government revenues and expenditures in response to changes in economic activity. Once adopted, automatic stabilizers are built into the structure of the economy, meaning they are not subject to deliberate changes by policymakers. Therefore, the best choice is D, which correctly identifies the unique characteristic of automatic stabilizers.

The Distinction Between Discretionary Fiscal Policy and the Use of Automatic