Question

In early​ 2008, it appeared that the U.S. economy was either in a recession or growing very slowly. President Bush announced a program of tax rebates. This program can be described as​ ___________ and was intended to​ ______________. A. discretionary fiscal​ policy; decrease government spending B. discretionary fiscal​ policy; increase consumer spending C. an automatic​ stabilizer; increase consumer spending D. an automatic​ stabilizer; increase government spending E. discretionary fiscal​ policy; increase government spending

Answer 1

Answer:

The correct answer is option B.

Explanation:

During the period of slowdown in the US economy, the government announced a program of tax rebates. This program classifies as a discretionary policy as it is planned by the government.

Tax rebates will lead to an increase in the disposable income of the consumer. This will cause the demand for goods to increase and further lead to an increase in consumer spending.

This is an example of an expansionary policy.