Question

​Needs-tested spending is​ ______ fiscal policy because it​ ______.

A. ​automatic; increases when the​ government's budget deficit falls
B. ​discretionary; increases when tax revenue increases
C. ​automatic; increases in recession and decreases in expansion
D. ​discretionary; is determined by economic hardship

Answer 1

The correct answer is C

Step-by-step explanation:

Needs testing spendings is the expenditures or expense of government which require or pass a needs test like the unemployment. So, during the time of recession, unemployment pays outs are high but these pay out stimulate the economy and vice versa or opposite of recession is in the expansion.

So, it is automatic policy as it increase during the time of recession and decrease or reduce in expansion.