Which of the following are characteristics of an expansionary fiscal policy?
I. Increased government spending on infrastructure projects.
II. Reduction in defense and education budgets.
III. Increasing money supply.
IV. Reduction in government borrowing.
A) I and III only
B) II and III only
C) I, II and IV only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

Expansionary fiscal policy is characterized by increased government spending and/or tax cuts to stimulate economic growth. I is correct because increased spending on infrastructure is a form of government spending. III is incorrect because increasing money supply is a monetary policy tool, not fiscal. II and IV are not characteristics of expansionary fiscal policy; II involves budget cuts, and IV, reduction in borrowing, does not directly relate to the fiscal stimulus measures typically associated with expansionary fiscal policy.

Which of the Following Are Characteristics of an Expansionary Fiscal