Discretionary ﬁscal policy refers to
A) any change in government spending or taxes that destabilizes the economy.
B) the authority that the president has to change personal income tax rates.
C) intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
D) the changes in taxes and transfers that occur as GDP changes.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy refers to intentional changes in taxes and government expenditures made by Congress to stabilize the economy. This is done with the intention to increase or decrease aggregate demand and hence stabilize the economy during periods of recession or inflation. It is different from automatic stabilizers like progressive taxes and transfer payments, which occur without any discretionary action by the government.

Discretionary ﬁScal Policy Refers to