An example of expansionary fiscal policy would be
A)a decrease in government spending to reduce budget deficits.
B)an increase in tax collection to reduce budget deficits.
C)a decrease in interest rates to help stimulate the economy.
D)an increase in government spending on infrastructure to create jobs and improve the economy.
E)an increase in interest rates to encourage private savings.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy refers to the use of government spending or taxation policies to stimulate economic growth during a recessionary period. An example of this would be an increase in government spending on infrastructure projects to create jobs and boost economic activity. Therefore, option D is the correct choice. Options A and B refer to contractionary fiscal policies aimed at reducing budget deficits by decreasing government spending or increasing taxes, which would have the opposite effect of expansionary policies. Option C refers to monetary policy, not fiscal policy. Option E refers to increasing interest rates to encourage private savings, which would not stimulate economic growth, making it an incorrect choice.

An Example of Expansionary Fiscal Policy Would Be