Are we currently in Discretionary Fiscal Policy Expanisionary or Contractionary? Why? Solution Are we currently in Discretionary Fiscal Policy Expanisionary or Contractionary? Why? Answer: US economy is currently recovering from the deep recession which hard hid US economy in 2008-09.Gradually, US economy started recovering and now growth rate has increased substantially. Now govt is using fiscal tapering policy that implies that Discretionary fiscal policy which is contractionary.If govt continues to pursue same expansanary policy, it might lead to the inflation in the economy..