Question

With the economy booming, the government starts to worry about the increasing rate of inflation, and decides to cut its spending on highway maintenance and defer it to sometime in the future. This is an example of:

Answer 1

Answer:

The correct answer is discretionary fiscal policy.

Explanation:

Discretionary policy is one that governments apply to influence public revenues or expenses. They have the advantage that they can act directly on the problems, but the drawback is that they usually take a long time, because the procedures require an acceptance process that is too long.