Question

Discretionary fiscal policy is best described as:______

a. an automatic change in income transfer payments to keep the economy at full employment.
b. a deliberate attempt to improve the functioning of free markets.
c. the design of a tax system that automatically stabilizes economic activity over time.
d. a deliberate attempt to cause the economy to move to full employment and price stability more quickly than it might otherwise.

Answer 1

D

Step-by-step explanation:

Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.

Discretionary fiscal policies can either be expansionary or contractionary

Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.

Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes