Discretionary fiscal policy refers to actions that make intentional changes in taxes and government expenditures in order to stabilize the economy.
Discretionary fiscal policy refers to any change in government spending or taxes which are made to destabilizes the economy. The authority which is changed by the president is the personal income tax rates.
There are two types of discretionary fiscal policy. The first type is expansionary fiscal policy. It is used when the federal government wants to increase the spending or decrease the taxes. When spending is increased, jobs are created.
The second is contractionary fiscal policy. It’s when the federal government decreases the spending or increases taxes. When spending is decreased, jobs are lost.
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