Question

Indicate whether each of the following is an example of an automatic stabilizer or discretionary fiscal policy. The government increases the top income tax bracket to 35%. The tax rate paid by an individual falls from 20% to 15% when his pay is reduced during a recession. A person qualifies for unemployment compensation when she loses her job during a recession.

Answer 1

Answer:1.. Discretionary fiscal policy.

2. Automatic stabilizer

3. Automatic stabilizer

Step-by-step explanation:

An automatic stabilizer are in built economy policy that are already in existence to tackle economy issues as it relates to recession and expansion in the economy.

An increase in tax rate is a new directive taken to curtailed expansionary drive in the economy after his occurence.

A fall in tax rate from 20 to 15 during recession is the already existing progressive tax rate that takes more tax during expansion and less during recession.

The unemployment compensation is also an inbuilt policy to tackle a recession issue.