Which of the following is an example of a discretionary fiscal policy action?
A) increased unemployment payments resulting from higher unemployment
B) an increase in spending on defense goods resulting from increased world tensions
C) an increase in tax revenue resulting from an increase in GDP
D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession
E) None of the above answers are correct.

Question

Quizplus · Accepted Answer

A decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession is an example of discretionary fiscal policy. Discretionary fiscal policy refers to deliberate changes in government spending or taxation, typically aimed at stabilizing the economy or addressing specific economic concerns. The other options listed are not examples of discretionary fiscal policy since they are either automatic stabilizers (like increased unemployment payments resulting from higher unemployment) or the result of other factors (like an increase in tax revenue resulting from an increase in GDP).

Which of the Following Is an Example of a Discretionary