Discretionary fiscal policy

A) Choose one (1) concept from the Chapter Section Titled “Key Concepts,” and: Key Concept: discretionary spending mandatory spending discretionary fiscal policy expansionary fiscal policy contractionary fiscal policy supply-side fiscal policies Laffer curve automatic stabilizers information lag recognition lag decision lag implementation lag public choice theory deficit surplus national debt public debt annually balanced budget cyclically balanced budget functional finance government budget constraint internally held debt externally held debt crowding-out effect fiscal sustainability 1. Illustrate (in words) the concept by using it in an analogy or a metaphor. Your response must contain at least 2 elements; The analogy or metaphor A brief explanation of why you see a parallel between the two things you are comparing 2. Use the concept in a contextualized and specific question. In other words, you are being asked to compose a question using the concept. To provide context, the question may be preceded or followed by a brief statement, but your response (meaning your concept question and statement) must have at least 5 elements; It must contain a question The question must explicitly use the concept It must be a question that inquires about the relevance or importance of the concept It must asked about an specific situation from the real world It must use data or information (numerical figures, dates, names, locations etc.) from one or more the following sources; Textbook Section Titled “Issue” Textbook Section Titled “By the Numbers” Textbook Section Titled “Around the World” News Article from http://www.economist.com/ News Article from https://www.bloomberg.com/ B) In your own words, answer the following question. Explain why increasing government purchases of goods and services is expansionary fiscal policy. Would increasing taxes or reducing transfer payments be contractionary or expansionary? Why?

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