Discretionary fiscal policy to stimulate the economy includes ...

[cnetterville]

Discretionary fiscal policy to stimulate the economy includes ________.
 
  A. lowering the tax rate paid by households with middle incomes
  B. raising the tax on gasoline
  C. the fall in tax revenue as the economy goes into recession
  D. the rise in tax revenue collected from businesses as their profits in-crease

Question 2

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency.)
 
  A) contractionary monetary policy
  B) contractionary fiscal policy
  C) expansionary monetary policy
  D) Both B and C will decrease both interest rates and exchange rates.

[SVictor]

Answer to Question 1

A Answer A is discretionary fiscal policy because it requires an act of Congress. It is an expansionary policy because it is de-signed to increase consumption expenditure and hence ag-gregate demand.

Answer to Question 2

D