Expansionary fiscal policy tends to:
A)increase the U.S. price level and reduce U.S. exports.
B)increase the U.S. price level and reduce U.S. imports.
C)decrease the U.S. price level and increase U.S. exports.
D)decrease the U.S. price level and increase U.S. imports.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy, which involves increased government spending or decreased taxes, typically leads to an increase in the U.S. price level. This can make U.S. goods more expensive relative to foreign goods, thus reducing U.S. exports as foreign buyers find U.S. goods less attractive due to higher prices.

Expansionary Fiscal Policy Tends To