An expansionary fiscal policy will lead to

Question

Quizplus · Accepted Answer

An expansionary fiscal policy involves government spending more money and/or decreasing taxes in order to increase aggregate demand and stimulate economic growth. This increase in spending and/or decrease in taxes will lead to a higher demand for goods and services, which will in turn cause an increase in interest rates. Higher interest rates will attract foreign investors, which will lead to an appreciation of the dollar. An increase in the value of the dollar will make exports more expensive for foreign buyers, thus reducing net exports.

An Expansionary Fiscal Policy Will Lead to