Question

Discretionary fiscal policy is defined as?

1. The use of government spending and taxing the policy to influence the economy 2.actions of the FED to control the money supply
3.built stabilizers to the economy
4.house hold budgetary decisions

Answer 1

Discretionary fiscal policy is the use of government spending and tax policies to influence the economy through enacting changes in taxation or spending in response to economic events.

Step-by-step explanation:

Discretionary fiscal policy refers to the use of government spending and tax policies to influence the economy. It involves enacting changes in taxation or spending in response to economic events. This type of fiscal policy is in contrast to automatic stabilizers, which are mechanisms that automatically shift taxing and spending in response to economic events without further legislation.

For example, during an economic downturn, the government may implement a discretionary fiscal policy by increasing government spending and reducing taxes to stimulate economic activity and increase aggregate demand. Conversely, during times of inflation or economic overheating, the government may implement contractionary fiscal policy by decreasing government spending and increasing taxes to reduce aggregate demand and inflationary pressures.

Answer 2

The use of government spending and taxing the policy to influence the economy