Discretionary fiscal policy:
A) is not subject to lags and therefore is effective at controlling business cycles.
B) refers to changes in the money supply used to smooth out the economy's ups and downs.
C) is favoured by monetarists.
D) is favoured by Keynesians.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate changes in government spending and taxation to stabilize the economy, and is a key aspect of Keynesian economics. It can be subject to lags, as policy changes often take time to be implemented and may not have an immediate impact.

Discretionary Fiscal Policy