What are two types of discretionary fiscal policy? The government has two types of discretionary fiscal policy options—expansionary and contractionary. Each type of fiscal policy is used during different phases of the economic cycle to stop or slow recessions and booms.
What are the two types of discretionary fiscal policy *? In the short-run, an expansionary fiscal policy, which increases G, or decreases T, or both, will increase the deficit or lower the surplus. A contractionary fiscal policy, on the other hand, will increase the surplus or decrease the deficit in the short-run.
What are the two types of fiscal policy? There are two types of fiscal policy: Contractionary fiscal policy and expansionary fiscal policy. Contractionary fiscal policy is when the government taxes more than it spends.
What are 3 examples of discretionary fiscal policy? Discretionary fiscal policy represents changes in government spending and taxation that need specific approval from Congress and the President. Examples include increases in spending on roads, bridges, stadiums, and other public works.
What are two types of discretionary fiscal policy? – Related Questions
What are discretionary fiscal policies?
Discretionary fiscal policy means the government make changes to tax rates and or levels of government spending. For example, cutting VAT in 2009 to provide boost to spending. Expansionary fiscal policy is cutting taxes and/or increasing government spending.
What are examples of fiscal policy?
The two major examples of expansionary fiscal policy are tax cuts and increased government spending. Both of these policies are intended to increase aggregate demand while contributing to deficits or drawing down of budget surpluses.
What is the difference between discretionary and nondiscretionary fiscal policy?
Discretionary fiscal policy consists of actions taken at the time of a problem to alter the economy of the moment. Nondiscretionary fiscal policy is that set of policies that are built into the system to stabilize the economy when growth is either too fast or too slow.
What is the main purpose of fiscal policy?
The usual goals of both fiscal and monetary policy are to achieve or maintain full employment, to achieve or maintain a high rate of economic growth, and to stabilize prices and wages.
What is difference between fiscal policy and monetary policy?
Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy. By contrast, fiscal policy refers to the government’s decisions about taxation and spending. Both monetary and fiscal policies are used to regulate economic activity over time.
Why do we need fiscal policy?
When the Economy Needs to Be Curbed
What is an example of nondiscretionary fiscal policy?
They include social security, welfare and unemployment compensation. The payment of unemployment benefits is a typical example of nondiscretionary fiscal policy. The payments necessarily increase when the number of unemployed increases, and that is during an economic slow down.
Are stimulus checks discretionary fiscal policy?
Stimulus Check Explained
Why has the use of discretionary fiscal policy declined?
Which of the following explains why discretionary fiscal policy is declining
Why does the government need to pass discretionary fiscal policy?
Discretionary fiscal policy is a change in government spending or taxes. Its purpose is to expand or shrink the economy as needed.
Who initiates discretionary fiscal policy?
D) the President initiates discretionary fiscal policy.
What is the difference between discretionary and automatic fiscal policy?
With discretionary policy there is a significant time lag before action can be taken. Automatic stabilizers are limited in that they focus on managing the aggregate demand of a country. Discretionary policies can target other, specific areas of the economy. Automatic stabilizers exist prior to economic booms and busts.
What are the three types of fiscal policy?
There are three types of fiscal policy: neutral policy, expansionary policy,and contractionary policy.
What is an example of contractionary fiscal policy?
Types of Fiscal Policy
Who is responsible for fiscal policy?
In the United States, fiscal policy is directed by both the executive and legislative branches of the government. In the executive branch, the President and the Secretary of the Treasury, often with economic advisers’ counsel, direct fiscal policies.
Which of the following is the best example of non-discretionary fiscal policy?
Non-discretionary fiscal policy, as the word suggests, is not at the discretion of the government. For example, progressive taxation push people into higher income tax brackets during boom times, substantially increasing their tax bill and reducing government budget deficits (or increasing government surpluses).
What is a nondiscretionary fiscal policy?
Nondiscretionary fiscal policy consists of policies that are built into the system so that an expansionary or contractionary stimulus can be given automatically. Unemployment insurance, the progressive income tax, and welfare serve as the built-in policies.
