Differentiate Between Discretionary Fiscal Policy and Non-Discretionary Policy (Or Built-In

question 47

Essay

Differentiate between discretionary fiscal policy and non-discretionary policy (or built-in stabilization).

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Definitions:

Income Increases

The rise in earnings received by an individual or household, which can impact consumption, savings, and investment behaviors.

Opportunity Cost

Opportunity cost represents the value of the best alternative foregone when a decision is made to choose one option over another.

Optimum

Refers to the best or most favorable condition, value, or level of something.

Budget Constraint

A budget constraint represents the combination of goods and services that a consumer can purchase with their limited income.