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42. An increase in tax rates as a result of a new tax law passed by...

42. An increase in tax rates as a result of a new tax law passed by Congress is an example of​ ________.

A.increasing the government deficit

B.increasing the government debt

C.discretionary fiscal policy

D.needs−tested taxing change.

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Answer #1

Option C.

  • An increase in tax rates as a result of a new tax law passed by Congress is an example of discretionary fiscal policy.
  • Discretionary fiscal policy refers to the deliberate changes in the government expenditures and taxes to influence the GDP.
  • This type of fiscal policy is usually undertaken to combat certain economic eventse like the economic turbulences and recession.
  • This fiscal policy is used by the government to either shrink or expand the economy as needed.
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