CFA Practice Question

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CFA Practice Question

A change in fiscal policy that is triggered by the state of the economy is ______.

A. automatic stabilizers
B. automatic fiscal policy
C. discretionary fiscal policy
Correct Answer: B

User Contributed Comments 3

User Comment
schweitzdm What's an example of one?
tangyjab Why not A?
Chidinmaiw tangyjab: the question asked for the change in fiscal policy. An automatic stabilizer is the result of an economic expansion/ recession. For instance if the economy was in a expansion meaning more people have more income from their wages, this will also mean that the income taxes received will increase due to the increase in people's wages. This was not the result of a fiscal policy intervention. Hope that cleared things up for you.
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