Expansionary ﬁscal policy is so named because it
A) involves an expansion of the nation's money supply.
B) necessarily expands the size of government.
C) is aimed at achieving greater price stability.
D) is designed to expand real GDP.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy is aimed at increasing aggregate demand and stimulating economic activity, leading to an expansion in real GDP. This is typically done through measures such as increasing government spending, cutting taxes, or a combination of the two. The goal is to increase consumer and business spending, which in turn leads to an increase in production, employment, and overall economic growth.

Expansionary ﬁScal Policy Is So Named Because It