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

Question

Quizplus · Accepted Answer

DDuring an economic boom, discretionary fiscal policy would typically involve increasing tax rates to cool down the economy and prevent overheating, which aligns with choice C. Automatic stabilizers, on the other hand, would naturally result in increased tax revenues due to higher incomes and profits during a boom, without a deliberate change in tax rates, which is a process described in choice D.

When an Economy Is in an Economic Boom, Discretionary Fiscal