Answer to Question #76067 in Macroeconomics for rajvinder

Question

The economy is in a recession and the recessionary gap is large.
  
Describe the discretionary and automatic fiscal policy actions that might occur.
Discretionary fiscal policy that might occur is​ ______.
Automatic fiscal policy that might occur is​ ______.  
A.
a decrease in transfer payments and an increase in taxes with no interference by​ Parliament;
a decrease in government expenditure and an increase in taxes by a decision of Parliament
B.
an increase in transfer payments and a fall in taxes with no interference by​ Parliament;
an increase in government expenditure and a cut in taxes by a decision of Parliament
C.
an increase in government expenditure and a cut in taxes by a decision of​ Parliament;
an increase in transfer payments and a fall in taxes
D.
a decrease in government expenditure and an increase in taxes by a decision of​ Parliament;
a decrease in transfer payments and an increase in taxes with no interference by Parliament

Answer 1

C.
an increase in government expenditure and a cut in taxes by a decision of Parliament;
an increase in transfer payments and a fall in taxes