Expansionary fiscal policy
A)increases long- run aggregate supply.
B)decreases aggregate demand.
C)increases aggregate demand.
D)increases short- run aggregate supply.
E)A, C, and D are correct.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy is designed to increase government spending and/or decrease taxes, which will lead to an increase in aggregate demand. This policy is often used during times of economic recession to stimulate economic growth and decrease unemployment. Therefore, increasing aggregate demand is the main goal of expansionary fiscal policy.

Expansionary Fiscal Policy