If discretionary fiscal policy creates a federal budget deficit,the economy must be experiencing falling output.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy can be used to address various economic conditions such as recession, inflation, and unemployment. It may or may not lead to a federal budget deficit depending on the specific policy measures taken by the government. Therefore, the statement is false as a federal budget deficit is not necessarily an indication of falling output in the economy.

If Discretionary Fiscal Policy Creates a Federal Budget Deficit,the Economy