When a government honors its debt obligations, this is an example of:
A) discretionary fiscal policy.
B) discretionary monetary policy.
C) a fiscal policy rule.
D) a monetary policy rule.

Question

Quizplus · Accepted Answer

Honoring debt obligations is a part of a fiscal policy rule, which is a set of guidelines that outline how the government will use its taxation and spending policies to achieve specific economic goals. It is not an example of discretionary monetary policy, which involves adjusting the money supply to influence the economy, or discretionary fiscal policy, which involves changing government spending or taxation in response to economic conditions.

When a Government Honors Its Debt Obligations, This Is an Example