Which of the following is a discretionary fiscal policy action?
A)an increase in the amount of unemployment compensation because more people become unemployed
B)a progressive tax system that leads to an increase in income tax revenues during an economic boom
C)a deliberate tax cut when the economy experiences high unemployment
D)an increase in Supplemental Security Income payments when more people become eligible for the benefits

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate changes in government spending or taxation designed to stabilize economic activity. A deliberate tax cut when the economy experiences high unemployment is an example of discretionary fiscal policy action. Option A is an example of automatic stabilizers, B is the result of the existing tax system, and D is an example of an automatic stabilizer that increases government transfers when more people become eligible.

Which of the Following Is a Discretionary Fiscal Policy Action