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Government tax and expenditure policies that affect real GDP are called:

A) automatic fiscal policy.
B) discretionary fiscal policy.
C) fiscal policy.
D) supply-side policy.


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Sonal Bahl
Sonal BahlLv10
10 Dec 2020

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Related questions

Which of the following is an advantage of automatic stabilizers?

a. Because they affect disposable personal income directly, automatic stabilizers act swiftly to reduce the degree of real GDP changes.
b. The lag for automatic stabilizers is relatively long.
c. It is much easier to measure the impact of automatic stabilizers than the impact of discretionary fiscal policy.
d. There is no administrative cost to implementing automatic stabilizer

Discretionary fiscal policy is best defined as:

a. the deliberate change in tax laws and government spending to change equilibrium income.
b. the deliberate manipulation of the money supply to expand the economy.
c. the arbitrary fluctuation in tax laws and budget requirements.
d. the automatic change in certain fiscal instruments when real GDP changes.

Explain how each fiscal policy influences GDP.

Expansionary Fiscal Policy - Increases in government expenditures and/or decreases in taxes to achieve particular economic goals.

Contractionary Fiscal Policy - Decreases in government expenditures and/or increases in taxes to achieve particular economic goals.

Discretionary Fiscal Policy- Deliberate changes in government expenditures and/or taxes to achieve particular economic goals.

Automatic Fiscal Policy - Changes in government expenditures and/or taxes that occur automatically without (additional) congressional action.

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