For example, cutting VAT in 2009 to provide boost to spending. Discretionary fiscal policy means the government make changes to tax rates and or levels of government spending. Discretionary Fiscal Policy: . The central government exercises discretionary fiscal policy when it identifies an unemployment or inflation problem, establishes a policy objective concerning that problem, and then deliberately adjusts taxes and/or spending accordingly. Most people chose this as the best definition of discretionary-fiscal-policy: A fiscal policy achieved... See the dictionary meaning, pronunciation, and sentence examples. Lower taxes (e.g. Both types of fiscal policies are differing with each other. This blog is part of a special series on the response to the coronavirus. Discretionary Fiscal Policy O Expansionary Fiscal Policy. We will explain how experts make use of the AD-AS graphs to elucidate these two types of fiscal policies in the assignments. For example, subsidies to ... One important set of measures has related to discretionary fiscal policy as both taxes and public spending have been adjusted. A final problem for discretionary fiscal policy arises out of the difficulties of explaining to politicians how countercyclical fiscal policy that runs against the tide of the business cycle should work. Discretionary fiscal policy represents changes in government spending and taxation that need specific approval from Congress and the President. Discretionary fiscal policy is the government action that indicates towards planned action to balance the economy whereas nondiscretionary fiscal policies are happening automatically. Discretionary fiscal policy differs from automatic fiscal stabilizers. There are two types of Fiscal policy, also known as the discretionary fiscal policy that need to be understood, to work upon a discretionary fiscal policy assessment answer. Discretionary Fiscal Policy: The central government exercises discretionary fiscal policy when it identifies an unemployment or inflation problem, establishes a policy objective concerning that problem, and then deliberately adjusts taxes and/or spending accordingly. This paper has set out to provide an overview of the issues that arise in the use of such fiscal policy both in the initial phase of … This is because discretionary fiscal policy is an inexact science with congress having different agendas trying to work out with the President using present data that are already in effect and taking time to generate a corrective action for the present conditions. Expansionary fiscal policy is cutting taxes and/or increasing government spending. Examples include increases in spending on roads, bridges, stadiums, and other public works. The automatic stabilizers in the economy inhibited the use of discretionary fiscal policy. The following article will update you about the difference between discretionary and automatic fiscal policy. Expansionary V/S Contractionary Fiscal Policy. O Contractionary Fiscal Policy. Discretionary fiscal policy is a demand-side policy that uses government spending and taxation policy to influence aggregate demand. Political Realties and Discretionary Fiscal Policy.