What is commonly included as a part of discretionary fiscal policy?

Discretionary fiscal policy refers to the deliberate changes in government spending and taxation that policymakers implement to influence economic activity. When considering the components of discretionary fiscal policy, deliberate government spending programs are a primary element because they are actively designed and adjusted by the government to respond to economic conditions.

These programs can be used to stimulate the economy in a recession (such as increased infrastructure spending or funding for social programs) or to cool down an overheating economy by reducing expenditures or increasing taxes. This flexibility allows governments to target specific economic issues and adapt their fiscal strategies as needed.

In contrast, automatic tax increases based on income, fixed budgets, and mandatory welfare disbursements are typically considered automatic stabilizers. These do not require active intervention by policymakers and automatically adjust based on economic conditions without the need for new legislative approval.