An example of discretionary fiscal policy would be

Question

Quizplus · Accepted Answer

Discretionary fiscal policy involves deliberate changes in government spending and taxation to influence the economy. A tax increase adopted to control inflationary pressures is an example of discretionary fiscal policy as it is a deliberate action taken by the government to reduce aggregate demand and inflationary pressures. The operation of the welfare state and the progressive federal income tax are not examples of discretionary fiscal policy as they are ongoing programs and not deliberate changes in government spending and taxation. An interest rate increase is an example of monetary policy, not discretionary fiscal policy.

An Example of Discretionary Fiscal Policy Would Be