When an economy is in a recession, discretionary fiscal policy would call for _______ and automatic stabilizers would _______.

Question

Quizplus · Accepted Answer

In a recession, discretionary fiscal policy would call for lowering tax rates to encourage consumers and businesses to spend more, thereby stimulating economic growth. Automatic stabilizers would also kick in, which are government programs that automatically increase spending or decrease tax revenue during a recession. This would result in lower tax revenues due to decreased economic activity.

When an Economy Is in a Recession, Discretionary Fiscal Policy