Economics Fiscal Policy Questions
Discretionary fiscal policy refers to deliberate changes in government spending and taxation by policymakers in order to influence the overall economy. These changes are typically made in response to economic conditions and are aimed at achieving specific economic goals, such as stimulating economic growth or reducing inflation.
On the other hand, automatic stabilizers are built-in features of the fiscal system that automatically adjust government spending and taxation in response to changes in economic conditions. These stabilizers help to stabilize the economy without the need for explicit policy actions. Examples of automatic stabilizers include progressive income taxes, unemployment benefits, and welfare programs.
In summary, the main difference between discretionary fiscal policy and automatic stabilizers is that discretionary fiscal policy involves intentional policy actions taken by policymakers, while automatic stabilizers are automatic adjustments in government spending and taxation that occur without explicit policy changes.