An example of a discretionary fiscal policy is when
A) tax receipts fall as incomes fall.
B) unemployment compensation payments rise with unemployment rates.
C) food stamp payments rise when the economy is in a recession.
D) Congress passes a law that raises marginal tax rates.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to deliberate actions by government to influence the economy through changes in spending or taxation. When Congress passes a law that raises marginal tax rates, it is an example of a discretionary action intended to affect economic activity, distinguishing it from automatic stabilizers like tax receipts falling with incomes or unemployment compensation rising with unemployment rates.

An Example of a Discretionary Fiscal Policy Is When