Chapter 13, Problem 7P

To determine

Whether the mentioned situations are an example of discretionary fiscal policy action

Concept introduction:

Fiscal Policy- The government policy related to the public revenue, borrowing and expenditure decisions is the fiscal policy of the country. It is generally founded on pre-determined rules founded in the constitution or other guiding authoritative structures. However, the government from time to time takes ad-hoc policy measures in response to economic turmoil in the country like a slowdown, depression, recovery or boom to affect factors like aggregate demand, savings, investment, income distribution etc. Such policy measures are called the discretionary fiscal policy measures.