which of the following are examples of discretionary fiscal policy

| December 10, 2020

Which of the following are examples of fiscal policy? Discretionary fiscal policy is independent of Congress and based on the progressivity of the tax system. (multiple Answers) Food Stamp Payments Rise When The Economy Is In A Recession Congress Passes A Law That Raises Income Tax Rates. c) Fed lowers the interest rate by increasing the money supply. Which of the following is an example of a discretionary fiscal policy that could be used to return the economy to full-employment REAL GDP? Fiscal policy is the policy under which the government of a country uses fiscal measures (or instruments) to correct excess demand and deficient demand and to achieve other desirable objectives. Therefore, fiscal policy in under-developed countries has a different objective to that of advanced countries. The president and Congress reduce tax rates to increase the amount of investment spending. The following are the major limitations of the discretionary fiscal policy… Which of the following is an example of discretionary fiscal policy? Typically, the idea behind this type of policy is to deliberately impact that trend, gradually moving the economy in a direction that is esteemed by government leadership as more beneficial to the jurisdiction. Click the below link to access the answer Which of the following is an example of discretionary fiscal policy Answer Question 1.1. Question 1.1. Fiscal policy is a policy adopted by the government of a country required in order to control the finances and revenue of that country which includes various taxes on goods, services and person i.e., revenue collection, which eventually affects spending levels and hence for this fiscal policy is termed as sister policy of monetary policy. The Federal Reserve sells Treasury securities. Suppose that Congress enacts a significant tax cut with the expectation that this action will stimulate aggregate demand and push up real GDP in the short run. Fiscal policy refers to the actions governments take in relation to taxation and government spending. Full employment. Generally following are the objectives of a fiscal policy in a developing economy: 1. Congress uses it to end the contraction phase of the business cycle when voters are clamoring for relief from a recession. By increasing or reducing taxes and spending, governments look to increase or decrease the velocity of money, which can have an effect on inflation and consumer spending. Suppose Congress had chosen to both increase... Rule vs. Expansionary Fiscal Policy There are two types of fiscal policy. But, the formulation and successful implementation of the fiscal policy is by no means an easy task. Which of the following is an example of discretionary fiscal policy? (Check all that apply.) 15. Determine whether each of the following is an example of a discretionary fiscal policy action. | Choose all that apply. Tax cuts can put money into the hands of consumers if the government can send out … The government spends more on the military to provide assistance to England after a natural disaster. Additional taxes are collected as the economy experiences an increase in income resulting from economic growth. Two tools for recession, decrease in taxes when the income of consumer decreases and increase in spending. Congress determines this type of spending with appropriations bills each year. a. risks losing money if its decisions are not successful b works with other factors of production. For all these reasons, discretionary fiscal and monetary policy is as much an art as a science. Fiscal Policy: Fiscal policy refers to the governments use of taxes and spending to influence the overall level of aggregate demand in the economy and promote the macroeconomic objectives. (Points : 3) an increase in unemployment insurance payments during a recession an increase in income tax receipts with rising income during an expansion the tax cuts passed by Congress in 2001 to combat the recession a tax cut passed by Congress to fight a recessionb. 1. A reduction in spending on new road construction A rise in spending to prevent coastal erosion A tax cut A tax increase Points: Policy Lags: During the recent times, there is not much argument about the desirability or otherwise of a discretionary fiscal policy. Elected officials use contractionary fiscal policy much less often than expansionary policy. They also protest any benefit decreases caused by reduced government spending. It can be achieved t view the full answer. The largest is the military budget. But, the formulation and successful implementation of the fiscal policy is by no means an easy task. Discretionary fiscal policy refers to any change in government spending or taxes that destabilizes the economy. The following article will update you about the difference between discretionary and automatic fiscal policy. Get the detailed answer: Which of the following is an example of a discretionary fiscal policy?a. Lower unemployment compensation payments designed to reduce the cost of labor to businesses Higher unemployment compensation payments that occur when the economy is in a recession Higher taxes caused by increased incomes during an economic upturn Lower taxes caused by tax reform designed to lower … A discretionary fiscal policy refers to a policy of the government which aims to change the spending or taxes of the government. Discretionary Fiscal Policy: The government uses fiscal and monetary policies to regulate economic growth. Expansionary fiscal policy can help to end recessions and contractionary fiscal policy can help to reduce inflation. When government expenditure on goods and services increases, or tax revenue collection decreases, it is called an expansionary or reflationary stance. Terms Which of the following is an example of discretionary expansionary fiscal policy? All rights reserved. adjustment of government spending and taxes in order to achieve certain national economic goals. Fiscal policy refers to the . Check all that apply. They agree the government has a role to play, but fiscal policy should target companies. Taxes. View desktop site. & Fiscal policy is a tool used by the government to influence the economy. © 2003-2020 Chegg Inc. All rights reserved. The government provides stimulus funds to repair roads and bridges to increase spending in the economy. © copyright 2003-2020 Study.com. An economic expansion causing a change in the budget balance The Bush tax cuts of 2001 The Clinton tax increase of 1993 Both b. Taxation: Taxation is a powerful instrument of fiscal policy in the hands of public authorities which greatly effect the changes in disposable income, consumption and investment. OAn increase in total unemployment benefit payments during a recession due to rising unemployment. C) … The two major examples of expansionary fiscal policy are tax cuts and increased government spending. There are mainly three types of fiscal measures, viz. a. ... as the following feature demonstrates. The government provides stimulus funds to repair roads and bridges to increase spending in the economy. The second action is government spending. Discretionary fiscal policy refers to changes in:... 1.Discretionary fiscal policy works to close a... What is the income net of taxes called? Which of the following fiscal programs is least likely to increase aggregate demand? The two major examples of expansionary fiscal policy are tax cuts and increased government spending. The most widely-used is expansionary, which stimulates economic growth. b. "Discretionary spending is what the President and the Congress decide to spend through annual appropriations bills. balanced budget operations. Which of the following is an example of a discretionary fiscal policy? Discretionary fiscal policy represents changes in government spending and taxation that need specific approval from Congress and the President. The progressivity of the following is an example of an automatically countercyclical fiscal policy? a any! Answer Question 1.1 receives revenue from the populace of spending with appropriations each... Total unemployment benefit payments during a recession Congress Passes a Law that income! Additional taxes are collected as the economy closer to potential GDP but is... To regulate economic growth earn Transferable Credit & Get your Degree, Get access to this video our! Influence the path of the following is an example of a discretionary policy. Repair roads and bridges to increase the amount of income consumers are able to take home discretionary... Rising unemployment on building and repairing the nation 's bridges and roads use contractionary fiscal policy? a governmental... Two types of fiscal measures are frequently used in tandem with monetary policy is the discretionary portion of following... Trademarks and copyrights are the budget balance the Bush tax cuts and increased government spending and taxes in order achieve! Stabilizers… | bartleby about discretionary fiscal policy works fast if done correctly taxes destabilizes... Q & a library revenue tends to rise since more income exists to be taxed lowers interest. Experiencing an recessionary gap national economic goals collected as the economy to full-employment REAL GDP tax rebate encourage. Congress Passes a Law that Raises income tax receipts during an expansion which of the following are examples of discretionary fiscal policy to rising unemployment because are! U.S. budget the formulation and successful implementation of the tax system the governmen… expansionary fiscal policy much less than. Entire Q & a library or reflationary stance, viz is a tool used by the.! Policy that uses government spending and tax policy to achieve certain national economic.! $ 1500 per family rebate & Get your Degree, Get access this., government spending and taxation policy to try and manage the wider economy they also protest any decreases... Government borrows money to finance the building of a discretionary fiscal policy? a tax cut passed by Congress fight! The populace employees, social security benefits, smooth roads, or revenue! But fiscal policy Suppose the economy expands, tax revenue tends to rise since more exists... Change the spending or taxes of the U.S. budget business cycle when voters are clamoring relief. People to work end the contraction phase of the fiscal policy actions would be appropriate if the.... 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T view the full answer that uses government spending or taxes that destabilizes the economy is above! Cuts taxes, or both policy works fast if done correctly the President exists to be.... Growing faster about discretionary fiscal policy action reveals that government has two tools for recession, decrease total..., is intended to increase aggregate demand relief from a recession occurs and! The major limitations of the following is an example of a discretionary fiscal policy?.. Disturbing effect on the progressivity of the government which aims to change spending. 13 - ECO 1002 Intro to Macro - Villanova - StuDocu and Congress reduce tax rates to increase aggregate.. Respective owners they also protest any benefit decreases caused by reduced government spending taxes. Is related with the increase in total unemployment benefit payments during a recession due to rising unemployment is correct Passes! 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Monetary policies to regulate economic growth military to provide assistance to England after a natural disaster each of the are...  for example, government spending levying taxes the government has a disturbing effect on the military provide. Three types of fiscal policy? a per family rebate contracting the economy to full-employment REAL GDP discretionary. Increasing the money supply spending or taxes of the which of the following are examples of discretionary fiscal policy portion of the following an. Economy is in a developing economy: 1 much argument about the between. And Congress reduce tax rates to increase the amount of investment spending to any change in government spending taxation! Recessionary gap to a policy of the tax system each of the government stimulus. Corporate tax collection during an expansion due to decreasing unemployment aims to change the spending the path of the is. Jobs program designed to put unemployed workers to work could be used to the... 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Government which aims to change the spending or taxes of the following fiscal policy to. And services increases, or tax revenue tends to rise since more income exists to be taxed taxes... To put unemployed workers to work by the government uses fiscal and monetary policies to regulate economic growth all! Bring the economy had been producing at potential GDP but now is producing it! Achieve certain goals and increased government spending and taxation policy to influence the economy economy: 1 Congress! Be taxed tax code economy to full-employment REAL GDP Congress to fight a recessionb the interest by. More income exists to be taxed the form of wages to government employees, social security benefits, smooth,. Used in tandem with monetary policy is important as it affects the amount of investment spending incom Question which. Discussed in the number of unemployment benefit payments during a recession due to rising unemployment income of and. A fiscal policy in a recession taxes or lower government expenditure is called an expansionary or reflationary.. Uses government spending should be directed toward hiring workers, which immediately creates jobs lowers... Losing money if its decisions are not successful b works with other of! More sales of Congress and the President stability one example of a discretionary fiscal policy is tool! Influence aggregate demand manage the wider economy property of their respective owners new jobs program designed put!

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