If government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this would be called a(n):
A)discretionary fiscal policy.
B)expansionary fiscal policy.
C)political business cycle.
D)nondiscretionary fiscal policy.

Question

Quizplus · Accepted Answer

A countercyclical change in tax revenues that occurs automatically over the course of the business cycle is an example of nondiscretionary fiscal policy. Discretionary fiscal policy refers to intentional government actions to influence the economy, while expansionary fiscal policy specifically refers to government actions to increase aggregate demand during a recession. The political business cycle refers to the theory that politicians manipulate the economy for political gain, rather than for actual economic reasons.

If Government Tax Revenues Change Automatically and in a Countercyclical