Sort the following items into those that are discretionary fiscal policy actions, those that are automatic?

Question

Sort the following items into those that are discretionary fiscal policy actions, those that are automatic fiscal policy actions, and those that are not fiscal policy. (5 marks)

a. An increase in expenditure on health care

b. An increase in unemployment benefits paid during a recession

c. A rise in the interest rate

d. A fall in customs revenue that results from a decrease in Canadian imports

e. An increase in expenditure on Canada’s submarine fleet

Answer 1

a. Discretionary Fiscal Policy

b. Automatic Fiscal Policy

c. Not Fiscal Policy

d. Discretionary Fiscal Policy

e. Discretionary Fiscal Policy