Discretionary Fiscal Policy Is Best Described as

question 157

Multiple Choice

Discretionary fiscal policy is best described as

• A)a deliberate attempt to cause the economy to move to full employment and price stability more quickly than it might otherwise.
• B)a deliberate attempt to improve the functioning of free markets.
• C)an automatic change in income transfer payments to keep the economy at full employment.
• D)the design of a tax system that automatically stabilizes economic activity over time.

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Definitions:

Opportunity Cost

The cost of the next best alternative foregone as a result of making a decision.

Incremental Revenue

Additional income generated from a new sale, project, or strategy, over and above existing revenue streams.

Incremental Costs

Costs that change as a result of a new decision or alternative action, also known as marginal costs.

Incremental Costs

Incremental costs are the additional costs incurred when a business increases its level of operations or production.