Question

Discretionary fiscal policy that might occur is​ ______. Automatic fiscal policy that might occur is​ ______. A. a decrease in transfer payments and an increase in taxes with no interference by​ Congress; a decrease in government expenditure and an increase in taxes by a decision of Congress B. an increase in transfer payments and a fall in taxes with no interference by​ Congress; an increase in government expenditure and a cut in taxes by a decision of Congress C. an increase in government expenditure and a cut in taxes by a decision of​ Congress; an increase in transfer payments and a fall in taxes D. a decrease in government expenditure and an increase in taxes by a decision of​ Congress; a decrease in transfer payments and an increase in taxes with no interference by Congress

Answer 1

Answer: a decrease in government expenditure and an increase in taxes by a decision of​ Congress; a decrease in transfer payments and an increase in taxes with no interference by Congress (D)

Explanation:

Discretionary fiscal policy is a government policy that changes government spending or taxes. The purpose of discretionary fiscal policy is to either expand or shrink the economy. It needs approval from the Congress and President. Its examples are increases in spending on bridges, roads, stadiums etc.

Automatic fiscal policy use spending in the form of taxes and transfer payments to automatically steady the economy. An example is when unemployed become eligible for the unemployment benefits after when losing their jobs during a recession.