An expansionary fiscal policy can result in

Question

Quizplus · Accepted Answer

An expansionary fiscal policy involves increased government spending and/or decreased taxes, which can lead to an increase in aggregate demand and higher GDP. However, if the economy is already operating at or near full capacity, the increased demand can result in inflation. Higher unemployment rates (Choice A) are not typically associated with an expansionary fiscal policy, as the aim is to stimulate economic growth and create jobs. Lower prices (Choice C) are also unlikely, as the increased demand can lead to higher prices. A recession (Choice D) would not be a result of expansionary fiscal policy, as the policy is specifically designed to stimulate the economy and prevent a recession.

An Expansionary Fiscal Policy Can Result in