Respuesta :
The Right Response is Option B which States that :-
During normal times, discretionary fiscal policy (b) is probably not very effective in influencing real GDP due to time lags.
What is discretionary fiscal policy and its 2 tools?
Discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules
- Two tools are used in discretionary fiscal policy. They are the tax code and the budgeting procedure. The U.S. budget's discretionary spending is the first instrument. Each year, Congress decides this kind of expenditure through appropriations bills. The military budget is the biggest. Spending that is not required by law is also included in discretionary spending.
- The tax code is the second instrument. It consists of excise taxes and taxes on imports, business earnings, and worker income. The tax code can only be changed by Congress. New legislation must be passed in order for Congress to make changes to the tax code. To change how laws and regulations are enforced, he can give the Internal Revenue Service instructions.
To know more about discretionary fiscal policy, check the links
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Correct question - During normal times, discretionary fiscal policy
A) is more effective in influencing real GDP than at times of a recession.
B) is probably not very effective in influencing real GDP due to time lags.
C) is more effective in influencing real GDP than automatic stabilizers.
D) works well because there are no lag problems in influencing real GDP.
