Expansionary fiscal policy can mitigate recessions, but it also
A)raises the budget deficit.
B)reduces the budget deficit.
C)has no impact on the budget deficit.
D)none of these.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending or decreasing taxes in order to stimulate the economy. However, this often leads to an increase in the budget deficit because the government is spending more than it is taking in through revenue. Therefore, choice A is the correct answer.

Expansionary Fiscal Policy Can Mitigate Recessions, but It Also