Discretionary monetary policy refers to the Fed's ability to react dynamically. Discretionary fiscal policy refers to A. any change in government spending or taxes that destabilizes the economy. Automatic stabilizers, which we learned about in the last section, are a passive type of fiscal policy, since once the system is set up, Congress need not take any further action.On the other hand, discretionary fiscal policy is an active fiscal policy that uses . c. any government policy that requires a lag period of at least three months. Both types of fiscal policies are differing with each other. This policy can be expansionary or contractionary. Nondiscretionary fiscal policy is at work everyday as a result of policies enacted years ago. When tax decrease, it will increase the people's disposable income which encourages them to spend more on the market. Discretionary fiscal policy represents changes in government spending and taxation that need specific approval from Congress and the President. 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. A discretionary fiscal policy refers to a government's DELIBERATE attempt to induce changes in the economy via G spending or taxes. 30 Related Question Answers Found What are the automatic and discretionary components of fiscal policy? For example, cutting VAT in 2009 to provide boost to spending. The government will reduce taxes to increase the demand. b) spending and taxing policies used by the government to influence the level of economy activity. within the economy. C) changes in taxes and government expenditures made by Congress to stabilize the economy. . Fiscal policy refers to the actions governments take in relation to taxation and government spending. It is usually segmented into tax brackets that progress to. This policy is set by the South African Reserve Bank (SARB). Fiscal policy refers to the use of budgeting tools by the government to influence a nation's economy. The keywords for this question are TAXES and SPENDING. Fiscal policy can be both discretionary and non-discretionary. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. B. the authority that the President has to change personal income tax rates. Discretionary fiscal policy is the purposeful change of government expenditures and tax collections by government to promote full employment, price stability, and economic growth. Governments use fiscal policy to try and manage the wider economy. Counter-cyclical fiscal policy is when expenditure is cut and/or . Fiscal policy refers to the actions governments take in relation to taxation and government spending. B. It can be expansionary or contractionary in nature. B. the authority that the president has to change personal income tax rates. Outline some of the pros and cons for each side of the debate. D) the changes in taxes and transfers that occur as GDP changes. Fiscal policy refers to the budgetary policy of the government, which involves the government controlling its level of spending and tax rates. Discretionary fiscal policy refers to the deliberate manipulation of taxes and government spending by Congress to alter real output and employment (thus impacting economic growth) and to control inflation. Unfortunately, discretionary fiscal policy is rarely able to deliver on its promise. C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. Our debt on fiscal consolidation . Automatic fiscal policy happens as a result of taxes or government programs that are already in place.. Fiscal policy refers to the government's use of revenue generation and spending strategies to control public revenue and expenditure, and ultimately influence the national economy. Fiscal policy is the use of government spending and tax policy to influence the path of the economy over time. Which one of the following statements about fiscal policy is correct? Under the discretionary fiscal policy, the government utilizes expansionary and contractionary measures to stimulate or slow down the economy. a. government purchases (spending) b. taxes c. both . Its purpose is to expand or shrink the economy as needed. Figure 1. Automatic stabilisation, where the economy can be stabilised by processes called fiscal drag and fiscal boost. The government responds to such economic changes by either raising or lowering taxes. Fiscal Stance: This refers to whether the government is increasing AD or decreasing AD, e.g. C Fiscal policy is especially difficult to use for stabilization because of the "inside lag"—the gap between the time when the need for fiscal policy arises and when the president and Congress implement it. When changes to taxes and spending occur in the economy without explicit action by the central government, such policy is: A. In macroeconomics, discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules. 1 Answer. changing taxes and spending.Discretionary fiscal policy means the government make changes to tax rates and or levels of government spending. Discretionary policy refers to policies that are implemented through one-off policy changes. C. Discretionary. Evensupposing that Congress and the President agree on time that a policy is needed, discretionary fiscal stimulus can be very effective and in some circumstances can even crowd in private investment . Cyclical. B. The following statement about discretionary fiscal policy is correct: Fiscal policy refers to the manipulation of government spending and taxes to stabilize domestic output, employment, and the price level. These moves should, in theory, stimulate the economy and thereby, increase aggregate demand. It is the other half of monetary policy Monetary Policy Monetary policy refers to the . The discretionary fiscal response to recover, i think it was based. Understandably, countercyclical fiscal policy works in two different direction during these two phases. Each type of fiscal policy is used during different phases of the economic cycle to stop or slow recessions and booms. Discretionary monetary policy is a more flexible approach whereby central bankers at the Fed can quickly react to changing factors to tweak the economy, especially in an unusual situation. In macroeconomics, discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules. Discretionary fiscal policy refers to: A. any change in government spending or taxes that destabilizes the economy. Discretionary fiscal policy refers to deliberate changes in taxation and other financial activities due to the shifting economic trends. expansionary or tight fiscal policy Automatic fiscal stabilisers - If the economy is growing, people will automatically pay more taxes ( VAT and Income tax) and the Government will spend less on unemployment benefits. Fiscal policy is largely based on ideas from John Maynard Keynes, who argued governments. It works against the ongoing boom or recession trend; thus, trying to stabilize the economy. Discretionary fiscal policy refers to: a. deliberate government efforts to stabilize the economy through government spending and taxes. B) the authority that the President has to change personal income tax rates. Expansionary Fiscal Policy Examples include increases in spending on roads, bridges, stadiums, and other public works. C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy D. the changes in taxes and transfers that occur as GDP C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy D. the changes in taxes and transfers that occur . It is the sister strategy to monetary policy through which a . 1) Fiscal policy refers to the a) government's ability to regulate the functioning of financial markets. Fiscal policy refers to the use of government spending and tax policy to influence economic growth in order to smooth variations in the business cycle, achieve full employment and reduce poverty. Discretionary Fiscal Policy Definition Discretionary fiscal policy refers to government policy that alters government spending or taxes. Discretionary Fiscal Policy Definition Discretionary fiscal policy refers to government policy that alters government spending or taxes. Monetary policy refers to the Federal Reserve's work with the money supply to influence the economy. Expansionary fiscal policy is when the government expands the money supply in the economy using budgetary tools to either increase spending or cut taxes —both of which provide consumers and businesses with more money to spend. Discretionary fiscal policy refers to deliberate changes in taxes and government expenditures made by congress to stabilize the economy. D. federal taxes and purchases that are intended to achieve macroeconomic policy objectives. Discretionary fiscal policy is the government action that indicates towards planned action to balance the economy whereas nondiscretionary fiscal policies are happening automatically. Answer (1 of 3): "Fiscal policy" is when government spending and revenue raising are adjusted to affect the macro economy. The most common kinds are "fiscal stimulus" (to increase or initiate growth), and "counter-cyclical policy". The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable. Fiscal Policy. A discretionary fiscal policy refers to the deliberate changes in government spending and taxes in order to stabilize the economy; for example, the government decides to increase its capital expenditure on road infrastructure. It is the sister strategy to monetary policy through which a . Monetary Policy Rules vs Discretion with John B Taylor. Fiscal Policy. The means that a Discretionary FISCAL policy includes Taxes and Spending. Fiscal Policy. Before discretionary fiscal policy is the failure to implement effectively undo fiscal stabilisation tool, discretionary fiscal policy is defined as measured by. Fiscal policy refers to the use of government spending and tax policies to influence economic conditions. Fiscal policy refers to government measures utilizing tax revenue and expenditure as a tool to attain economic objectives. Fiscal policy is the use of government taxing and spending powers to manage the behaviour of the economy. Discretionary monetary policy than monetary from that is based on. the money supply and interest rates that are intended to achieve macroeconomic policy objectives. Definition: discretionary fiscal policy Deliberate changes in taxes (tax rates) and government spending by Congress to promote full-employment, price stability, and economic growth. When a government borrows money in the financial capital market, it causes a shift in the demand for financial capital from D 0 to D 1.As the equilibrium moves from E 0 to E 1, the equilibrium interest rate rises from 6% to 7% in this example.In this way, an expansionary fiscal policy intended to shift aggregate demand to the right can also lead to a . Automatic Automatic stabilisation, where the economy can be stabilised by processes called fiscal drag and fiscal boost. Fiscal Policy and Interest Rates. On the other hand, automatic stabilization refers to the process of putting in place features that ease fluctuations in a . Fiscal policy refers to spending by the state/government. Many papers have investigated the effectiveness of stabilization policies in the recent recession, but little is known on the relationship between the two . Discretionary Fiscal is the government policy to change the tax and spending policy to influence the aggregate demand. A topic often discussed when economic growth is brought up is a country's monetary and fiscal policy mix. 1. Fiscal policy decisions are determined by the Congress and the Administration; the Fed plays no role in determining fiscal policy. For example, a government may decide to reduce taxes. Fiscal policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy. Any change in government spending or taxes that destabilizes the economy. C) changes in taxes and government expenditures made by Congress to stabilize the economy. i.e. Discretionary fiscal policy refers to: A) any change in government spending or taxes that destabilizes the economy. Monetary policy refers to the control of a countries money supply. 1. Discretionary Fiscal Policy. Fiscal policy has been a central tool for governments to counteract economic stagnation in the recent crisis, both in terms of automatic stabilization as well as discretionary fiscal policy. Discretionary Discretionary policy refers to policies which are decided, and implemented, by one-off policy changes. Fiscal Stance: This refers to whether the government is increasing AD or decreasing AD, e.g. discretionary fiscal policy (a) refers to the working of built in stabilizers to change the levels of expenditure and taxes to influence the level of national output, employment and prices (b) refers to how governments act directly as well as indirectly to influence the level of taxes toattain export competitiveness (c) refers to deliberate … Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. Suppose as a professional economist you are asked to take part in a debate about the wisdom of pursuing discretionary fiscal policy versus relying on automatic stabilizers. While it can be used effectively to reduce budget deficits, combat unemployment and increase domestic consumption . For instance, a central banker could make decisions on interest rates on a case-by-case basis instead of allowing a set rule, such as Friedman's k-percent rule, an inflation target following the Taylor rule, or a nominal income target to . Fiscal Policy tools. Discretionary fiscal policy refers to deliberate changes in taxes or spending. For instance, a central banker could make decisions on interest rates on a case-by-case basis instead of allowing a set rule, such as Friedman's k-percent rule, an inflation target following the Taylor rule, or a nominal income target to . A counter-cyclical fiscal policy refers to strategy by the government to counter boom or recession through fiscal measures. Fiscal policy can be discretionary or nondiscretionary (automatic stabilizers). C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. Thus, discretionary fiscal policy refers to the sudden imposition of new taxes or changes in their rates, and/or on how to spend government revenue. The word "discretionary" means that the policy changes are at the discretion or option of the Federal government. Fiscal Policy MCQ - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Discretionary fiscal policy refers to: A) any change in government spending or taxes that destabilizes the economy. Such policies are framed concerning their impact on the country, i.e., on consumers, organizations, investors, foreign markets, etc. Discretionary fiscal policy refers to: A. any change in government spending or taxes that destabilizes the economy. Its purpose is to expand or shrink the economy as needed. 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