Introduce two types of fiscal policies: automatic fiscal policy and discretionary fiscal policy. Discuss some potential issues that may arise with discretionary fiscal policy. For this discussion:

1. What discretionary fiscal policy is and the types of discretionary spending government can propose. Your task is to propose a policy that utilizes discretionary fiscal spending, then explain the benefits and purpose of this policy.
2. What automatic fiscal policy is and describes the two types of automatic stabilizers. Explain the benefits of automatic fiscal policy.

Include these objectives:

• Explain how economic recession or expansion can influence a budget surplus or budget deficit and the debt-to-GDP ratio
• Describe how the federal government can use discretionary fiscal policy to stabilize the economy
• Identify examples of automatic stabilizers explain how they work to counterbalancing recession or boom
• Explain the three lag times that often occur when solving economic problems
• Identify the legal and political challenges of responding to an economic problem