An Example of a Discretionary Fiscal Policy Is When

question 71

Multiple Choice

An example of a discretionary fiscal policy is when

• A)the government passes a law that raises personal marginal tax rates.
• B)tax receipts fall as incomes fall.
• C)unemployment compensation payments rise with unemployment rates.
• D)All of the above answers are correct.

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Definitions:

Variable Manufacturing

Costs that vary directly with the level of production output, such as materials and direct labor costs.

Fixed Manufacturing

Costs associated with the manufacturing process that do not vary with production volume, such as rent, depreciation, and salaries of permanent staff.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset over time.