Which statement is CORRECT?
A)Automatic stabilizers indicate deliberate action by policy makers.
B)Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers.
C)Discretionary fiscal policy indicates deliberate action by policy makers.
D)Automatic stabilizers are risky to use and sometimes can get the economy destabilized.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy involves deliberate actions taken by policy makers, such as changes in government spending or taxes. Automatic stabilizers, on the other hand, are built-in features of the economy that automatically help stabilize economic fluctuations, such as unemployment insurance or progressive income taxes. Therefore, option C is the correct statement. Option A is incorrect because automatic stabilizers operate without deliberate action by policy makers. Option B is incorrect because it describes automatic stabilizers, not discretionary fiscal policy. Option D is incorrect because automatic stabilizers are designed to help stabilize the economy, not destabilize it.

Which Statement Is CORRECT