Active changes in tax and spending by government intended to smooth out the business cycle are called ________,and changes in taxes and spending that occur passively over the business cycle are called ________.
A)automatic stabilizers; discretionary fiscal policy
B)discretionary fiscal policy; automatic stabilizers
C)automatic stabilizers; monetary policy
D)discretionary fiscal policy; conscious fiscal policy

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to active changes in tax and spending by the government to smooth out the business cycle. Automatic stabilizers, on the other hand, are changes in taxes and spending that occur passively over the business cycle. Therefore, choice B - discretionary fiscal policy; automatic stabilizers - is the correct answer.

Active Changes in Tax and Spending by Government Intended to Smooth