What is the difference between discretionary fiscal policy and expansionary fiscal policy?
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 is discretionary fiscal policy?
These are intentional government policies to increase or decrease government spending or taxation. For example, Keynesian economists might favour a deliberate increase in the size of the fiscal deficit when private sector demand and confidence is low during an economic recession.
What is an example of a 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 is the difference between discretionary and non discretionary policy?
Quote from video on Youtube:If discretionary is about choice non-discretionary. Means there's no choice. So non discretionary or cyclical factors are to do with the state of the economy.
Is expansionary fiscal policy non discretionary?
Nondiscretionary fiscal policy consists of policies that are built into the system so that an expansionary or contractionary stimulus can be given automatically. The welfare state and the progressive income tax serve as the built-in policies.
What is expansionary policy?
Expansionary policy is intended to boost business investment and consumer spending by injecting money into the economy either through direct government deficit spending or increased lending to businesses and consumers.
What are some examples of expansionary 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 discretionary policy?
From Wikipedia, the free encyclopedia. In macroeconomics, discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules.
Why is expansionary fiscal policy named so?
Expansionary fiscal policy is so named because it: involves an expansion of the nation’s money supply.
What is the difference between discretionary fiscal policy and automatic Stabilisers?
Discretionary fiscal policy and automatic stabilizers are frequently confused with each other. If a government has to take any action to make it happen, it is discretionary fiscal policy. If it is something that happens on its own, it is an automatic stabilizer.
Which fiscal policy would be the most expansionary?
Option A is the correct answer.
It is done by increasing government spending or implementing tax cuts. An increase in government spending leads to an increase in total demand for goods and the GDP. So, the fiscal policy of a $40 billion increase in government expenses would be the most expansionary fiscal policy.
Which of the following would be an example of a discretionary and expansionary fiscal policy?
Which of the following would be an example of a discretionary and expansionary fiscal policy? Approval of a new spending bill by congress. An increase in spending in an active way by congress is an example of discretionary policy, and it would be expansionary and will increase aggregate demand and GDP.
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 is expansionary fiscal policy and when is it used?
Expansionary fiscal policy is when the government increases the money supply in the economy using budgetary instruments to either raise spending or cut taxes—both having more money to invest for customers and companies.
What is the goal of expansionary policy?
Expansionary monetary policy aims to spur economic growth through increased liquidity. Increased money supply promotes economic growth.
Does expansionary fiscal policy cause inflation?
However, expansionary fiscal policy can result in rising interest rates, growing trade deficits, and accelerating inflation, particularly if applied during healthy economic expansions. These side effects from expansionary fiscal policy tend to partly offset its stimulative effects.
What’s another word for expansionary?
Expansionary Synonyms – WordHippo Thesaurus.
What is another word for expansionary?
| expansionist | imperialist |
|---|---|
| coloniserUK | colonizerUS |
How does expansionary fiscal policy increase spending in the economy?
Expansionary fiscal policy increases the level of aggregate demand, either through increases in government spending or through reductions in taxes. Expansionary fiscal policy is most appropriate when an economy is in recession and producing below its potential GDP.
What is the effect of expansionary fiscal policy on unemployment and inflation?
The goal of expansionary fiscal policy is to reduce unemployment. Therefore the tools would be an increase in government spending and/or a decrease in taxes. This would shift the AD curve to the right increasing real GDP and decreasing unemployment, but it may also cause some inflation.