Which of the following is an example of discretionary fiscal policy?
A)An increase in the number unemployment benefit payments during a recession due to rising unemployment.
B)An increase in income tax receipts during an expansion because incomes are rising.
C)Tax increases to combat rising inflation.
D)A decrease in income tax receipts during a recession because incomes are falling.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate changes in government spending and taxation to influence the economy. Tax increases to combat rising inflation are an example of a policy choice made to manage economic conditions, distinguishing it from automatic fiscal policies that occur without direct intervention, such as changes in tax receipts or unemployment benefits due to economic shifts.

Which of the Following Is an Example of Discretionary Fiscal