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Discretionary fiscal policy versus automatic stabilizers

Suppose as a professional economist you are asked to take part in a debate about the wisdom of pursuing discretionary fiscal policy versus relying on automatic stabilizers. Outline some of the pros and cons for each side of the debate.

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Outline some of the pros and cons for each side of the debate.
1. Suppose as a professional economist you are asked to take part in a debate about the wisdom of pursuing discretionary fiscal policy versus relying on automatic stabilizers. Outline some of the pros and cons for each side of the debate.

As per finpipe.com, "The term fiscal policy refers to the expenditure a government undertakes to provide goods and services and to the way in which the government finances these expenditures." Fiscal policy is an important instrument to regulate the economy. According to Arther Simithies fiscal policy is a policy under which government uses its expenditure and revenue programme to produce desirable effects and avoid undesirable effects on the national income, production and employment. (Informationbible, 2009)
Hence ...

Solution Summary

Response provides guidance regarding discretionary fiscal policy versus relying on automatic stabilizers

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