Discretionary fiscal policy is bestdefined as:
A)the deliberate change in tax laws and government spending to change equilibrium income.
B)the deliberate manipulation of the money supply to expand the economy.
C)the arbitrary fluctuation in tax laws and budget requirements.
D)the automatic change in certain fiscal instruments when real GDP changes.
E)the policy action taken by the Congress to reduce the federal budget deficit.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to the deliberate action by the government to change tax laws and government spending in order to achieve a desired level of equilibrium income. This is in contrast to automatic stabilizers, which are built-in features of the economy that automatically adjust taxes and government spending in response to changes in real GDP. Therefore, the correct choice is A.

Discretionary Fiscal Policy Is Bestdefined As