What Is the Distinction Between Discretionary Fiscal Policy and the Use

question 131

Multiple Choice

What is the distinction between discretionary fiscal policy and the use of automatic stabilizers?  

• A) Only discretionary fiscal policy can stimulate the economy. 
• B) Only automatic stabilizers can stimulate the economy. 
• C) Discretionary fiscal policy, once adopted, is built into the structure of the economy, while automatic stabilizers are NOT. 
• D) Automatic stabilizers, once adopted, are built into the structure of the economy, while discretionary fiscal policy is NOT.

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Definitions:

Pretax Return

The income a company generates before any taxes are subtracted.

Working Capital

The gap between an organization's current assets and its current liabilities, reflecting the business's short-term fiscal stability and operational effectiveness.

Salvage Value

The projected sales value of an asset at the termination of its effective life.

Financially Attractive

Describes opportunities or investments that are likely to provide a good return or prove to be profitable.