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CA Foundation Exam  >  CA Foundation Questions  >  The deliberate action of the government to st... Start Learning for Free
The deliberate action of the government to stabilize the economy, as opposed to the inherent automatic stabilizing properties of the fiscal system, is known as
  • a)
    Forced fiscal policy
  • b)
    Manual fiscal policy
  • c)
    Discretionary fiscal policy
  • d)
    Automatic fiscal policy
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
The deliberate action of the government to stabilize the economy, as o...
Discretionary Fiscal Policy

Discretionary fiscal policy refers to the deliberate actions taken by the government to stabilize the economy. These actions are taken through changes in government spending, taxes, or transfer payments. The government uses discretionary fiscal policy to influence the economy by increasing or decreasing aggregate demand.

Forced Fiscal Policy and Automatic Fiscal Policy

Forced fiscal policy is not a correct term in economics. However, automatic fiscal policy refers to the inherent automatic stabilizing properties of the fiscal system. For instance, when the economy is in a recession, there is a decline in economic activity, which leads to a decrease in tax revenue and an increase in government spending on programs such as unemployment compensation. This, in turn, helps to stabilize the economy.

Manual Fiscal Policy

Manual fiscal policy is a vague term that does not apply in economics. The correct term for deliberate actions taken by the government to stabilize the economy is discretionary fiscal policy.

Conclusion

In conclusion, discretionary fiscal policy is the deliberate action taken by the government to stabilize the economy. This is done through changes in government spending, taxes, or transfer payments. Forced fiscal policy and manual fiscal policy are not correct terms in economics. Automatic fiscal policy refers to the inherent automatic stabilizing properties of the fiscal system.
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The deliberate action of the government to stabilize the economy, as o...
It's is discretionary fiscal policy
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Similar CA Foundation Doubts

Features of a Mixed Economy:A mixed economy is an economic system that combines elements of both a market economy and a planned economy. It incorporates features of both private enterprise and government intervention. The correct answer is D, as all of the following features are characteristic of a mixed economy:1. Planned economy:A mixed economy includes elements of a planned economy, where the government plays a role in guiding and regulating economic activities. It formulates economic plans and policies to ensure the efficient allocation of resources and to promote economic stability.2. Dual system of pricing:In a mixed economy, there exists a dual system of pricing, which means that both market prices and government-set prices coexist. While market forces determine prices for most goods and services, the government may intervene to regulate prices in certain sectors to protect consumers or promote social welfare.3. Balanced regional development:Another characteristic of a mixed economy is the emphasis on balanced regional development. The government intervenes to ensure that economic growth and development are not concentrated in specific regions or industries but are spread across different regions and sectors. This helps to reduce regional disparities and promote overall economic stability and social welfare.Benefits of a Mixed Economy:A mixed economy offers several benefits due to its combination of market forces and government intervention. Some of these benefits include:1. Economic efficiency:By incorporating market mechanisms, a mixed economy allows for resource allocation based on supply and demand, which promotes economic efficiency. Market forces encourage competition, innovation, and productivity, leading to higher levels of economic growth.2. Social welfare:Government intervention in a mixed economy enables the provision of public goods and services that may not be adequately provided by the market alone. This includes areas such as healthcare, education, infrastructure, and social security, ensuring a certain level of social welfare and equity.3. Stability and regulation:The government's role in a mixed economy helps to maintain economic stability through macroeconomic policies such as fiscal and monetary measures. It also regulates certain sectors to prevent market failures, protect consumer rights, and ensure fair competition.Conclusion:A mixed economy combines the advantages of both market forces and government intervention. It allows for economic efficiency, social welfare, and stability. The features of a mixed economy include elements of a planned economy, a dual system of pricing, and balanced regional development. These features work together to create a system that promotes both economic growth and social welfare.

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The deliberate action of the government to stabilize the economy, as opposed to the inherent automatic stabilizing properties of the fiscal system, is known asa)Forced fiscal policyb)Manual fiscal policyc)Discretionary fiscal policyd)Automatic fiscal policyCorrect answer is option 'C'. Can you explain this answer?
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The deliberate action of the government to stabilize the economy, as opposed to the inherent automatic stabilizing properties of the fiscal system, is known asa)Forced fiscal policyb)Manual fiscal policyc)Discretionary fiscal policyd)Automatic fiscal policyCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The deliberate action of the government to stabilize the economy, as opposed to the inherent automatic stabilizing properties of the fiscal system, is known asa)Forced fiscal policyb)Manual fiscal policyc)Discretionary fiscal policyd)Automatic fiscal policyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The deliberate action of the government to stabilize the economy, as opposed to the inherent automatic stabilizing properties of the fiscal system, is known asa)Forced fiscal policyb)Manual fiscal policyc)Discretionary fiscal policyd)Automatic fiscal policyCorrect answer is option 'C'. Can you explain this answer?.
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