Question

A) fiscal policy refers to deliberate, purposeful changes to shift the AD curve. But some portion of fiscal policy is also B) (opposite of discretionary). This results from the fact that the amount that the federal government must C) , and the amount that it takes in in D) , are also affected by changes in the level of E) activity.

Answer 1

A) Discretionary fiscal policy refers to deliberate, purposeful changes to shift the AD curve. Some portion of fiscal policy is also B) Mandatory. This results from the fact that the amount that the federal government must C) spend on welfare programs as a compulsory payment, and the amount that it takes in D) response to the business cycle/at discretion , are also affected by changes in the level of E) economic activity.

For example, Social security is a compulsory or mandatory program which indicates that it has to be paid by the government even when the government has to adopt balanced budget. Besides there are policies based on discretion rather than compulsion if there is a cyclical budget.