Which of the following best describes discretionary fiscal policy?
Practice Questions
Q1
Which of the following best describes discretionary fiscal policy?
Automatic changes in government spending and taxes
Deliberate changes made by the government to influence the economy
Changes in monetary policy by the central bank
None of the above
Questions & Step-by-Step Solutions
Which of the following best describes discretionary fiscal policy?
Step 1: Understand what fiscal policy means. Fiscal policy is how the government uses spending and taxes to influence the economy.
Step 2: Learn about discretionary fiscal policy. This is when the government makes specific changes to spending and taxes intentionally.
Step 3: Recognize that these changes are made to help improve the economy, like boosting growth or reducing unemployment.
Step 4: Remember that discretionary fiscal policy is different from automatic fiscal policy, which happens without new decisions, like tax changes that occur automatically when income levels change.
