Multiple choice

Which of the following is a discretionary fiscal policy?

  1. Tax charged on personal income tax

  2. Tax charged on corporate income tax

  3. Transfer payments policy

  4. Change in tax rates
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

It is a discretionary fiscal policy. The discretionary fiscal policy is adopted when the government intervenes in it to make some changes. If the tax rates are changed, it is beyond the existing fiscal policy. For instance, the reduction in tax rates on income of people will lead to increase in consumption level.

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