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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
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:
- 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.
- 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
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