Determine whether each of the following is an example of a discretionary fiscal

Question

Determine whether each of the following is an example of a discretionary fiscal policy
action. Give reasons to support your answer.
a) A recession occurs, and government-funded unemployment compensation is paid
out to laid-off workers.
b) Congress votes to fund a new jobs program designed to put unemployed workers
to work.
c) The Federal Reserve decides to reduce the quantity of money in circulation in an
effort to slow down inflation.
d) Under powers authorized by an act of Congress, the president decides to authorize
an emergency release of funds for spending programs intended to head off
economic crises.

Explanation / Answer

Discretionary Fiscal Policy refers to any actions purposely taken by the government to increase economic growth (namely to ensure full employment) a) I would say this is an automatic stabilizer because this action is already in place and not something the government is doing in addition b) This is discretionary fiscal policy because Congress is voting to promote a new program that is not already included in our policy c) This is discretionary fiscal policy because the Federal Reserve is taking action to control the flow of money and not allowing the market to balance itself d) This is discretionary fiscal policy because the President is taking an action to control the flow of money

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.