Which of the following is an example of a discretionary fiscal policy action?
A) an increase in government spending to deal with a recession
B) a decrease in tax revenues as taxpayers' incomes decrease
C) increasing the minimum wage rate
D) raising regulations in the banking industry

Question

Quizplus · Accepted Answer

A discretionary fiscal policy action is a deliberate change in government spending and/or taxation designed to promote economic stability or growth. An example of this would be an increase in government spending to deal with a recession. B is incorrect because a decrease in tax revenues due to a decrease in taxpayers' incomes would be an automatic stabilizer, not a discretionary fiscal policy action. C and D are also incorrect because they involve regulatory policies, not fiscal policies.

Which of the Following Is an Example of a Discretionary