Which of the Following Best Illustrates the Use of Discretionary

question 78

Multiple Choice

Which of the following best illustrates the use of discretionary fiscal policy?

• A)Congress providing $1 billion in relief aid for hurricane victims
• B)Congress appropriating $400 million to help the needy and the appropriation being financed by a tax on wealth
• C)Income tax receipts being smaller because of a decline in real GDP during a recession
• D)The Federal Reserve tightening credit when it receives news of accelerating inflation
• E)Congress passing a bill authorizing $2 billion in additional spending when it receives news of a deepening recession

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Definitions:

Capital Gains

The profit that results from a sale of a capital asset, such as stock, bond, or real estate, where the sale price exceeds the purchase price.

Eligible Dividends

Dividends that are qualified for preferential tax treatment under certain tax laws.

Provincial Tax Brackets

The different rates of tax applied to various levels of income within a specific province, determining how much tax individuals owe based on their income.