Answer: Discretionary fiscal policy is a policy action initiated by an act of Congress. Automatic fiscal policy are mechanisms that help stabilize GDP and operate without the need for explicit action. Both taxes (such as income taxes, whose receipts rise when the economy expands and fall when the economy contracts) and needs-tested spending (such as welfare spending, which decreases when the economy expands and increases when the economy contracts) are examples of automatic fiscal policy.
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ReplyDeleteDiscretionary fiscal policy is a policy action initiated by an act of Congress. Automatic fiscal policy are mechanisms that help stabilize GDP and operate without the need for explicit action. Both taxes (such as income taxes, whose receipts rise when the economy expands and fall when the economy contracts) and needs-tested spending (such as welfare spending, which decreases when the economy expands and increases when the economy contracts) are examples of automatic fiscal policy.