Explain how tax revenue can be both an automatic fiscal policy and a discretionary fiscal policy
What will be an ideal response?
When Congress changes the tax law, it is a discretionary policy. For any given set of tax laws, a change in the state of the economy will automatically change the tax revenue. Hence for a given set of tax laws, tax revenues operate as an automatic fiscal policy.
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In a fiduciary monetary system
A) coins get their value from the precious metals of which they are made. B) money gets its value from the confidence that the public has in its acceptability. C) paper currency does not have value, but balances in checking accounts do. D) checking account balances do not have value, but paper currency does.
Last month, Sally spent $3,000 in repairing her old car. Now her car requires an additional $2,000 in repairs. She could get a comparable car for $2,500 . She should
a. repair her car because the money she has already spent repairing the car ($3,000 . exceeds the price of the new car ($2,500) b. buy a new car because sunk costs should be ignored in decision making c. buy a new car because the price of the new car ($2,500) is less than the total amount she would spend on her current car ($5,000) d. repair her car since the cost of repairing it is lower than the cost of buying another car e. repair the car or buy a comparable one because the opportunity costs are the same