Having a countercyclical discretionary fiscal policy would involve:
A) running budget deficits during an expansion and surpluses during a contraction.
B) running budget deficits during a contraction and surpluses during an expansion.
C) running balanced budgets at all times.
D) running consistent budget deficits.

Question

Quizplus · Accepted Answer

Countercyclical discretionary fiscal policy involves using fiscal policy tools (such as government spending and taxation) to counteract the natural fluctuations of the business cycle. This means running budget deficits during a contraction (when the economy is in a recession and needs stimulus) and surpluses during an expansion (when the economy is growing and doesn't need as much stimulus). Therefore, choice B is the best answer.

Having a Countercyclical Discretionary Fiscal Policy Would Involve