Expansionary fiscal policy consists of:

Question

Quizplus · Accepted Answer

Expansionary fiscal policy is a macroeconomic policy that aims to stimulate economic growth and increase aggregate demand. It involves increasing government spending and reducing taxes. When government spending is increased, it creates job opportunities and also increases disposable income in consumers leading to an increase in demand. When taxes are reduced, it reduces the burden on taxpayers, which can increase disposable income, stimulate consumption expenditure, and increase aggregate demand. Therefore, the option that includes increased government purchases and decreased taxes is the best choice for expansionary fiscal policy.

Expansionary Fiscal Policy Consists Of