Discretionary fiscal policy is a fiscal policy action,such as
A)an interest rate cut,initiated by an act of Congress.
B)an increase in payments to the unemployed,initiated by the state of the economy.
C)a tax cut,initiated by an act of Congress.
D)a decrease in tax receipts,initiated by the state of the economy.
E)an increase in the quantity of money.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate actions taken by government to influence the economy. A tax cut, initiated by an act of Congress, is an example of discretionary fiscal policy because it involves a deliberate change in government taxation policies aimed at stimulating economic growth. Choice A is incorrect because an interest rate cut is a monetary policy action, not fiscal policy. Choice B is incorrect because an increase in payments to the unemployed is an example of automatic stabilizers, not discretionary fiscal policy. Choice D is incorrect because a decrease in tax receipts is an effect of economic downturns, not an intentional action taken by the government. Choice E is incorrect because an increase in the quantity of money is a monetary policy action, not fiscal policy.

Discretionary Fiscal Policy Is a Fiscal Policy Action,such as