Expansionary ﬁscal policy is so named because it involves an expansion of the nation's money supply.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or reducing taxes to stimulate economic growth, which may lead to an increase in the money supply. However, it is not necessarily the same as an expansion of the money supply. The expansion of the money supply is typically the result of monetary policy, which is controlled by the central bank.

Expansionary ﬁScal Policy Is So Named Because It Involves an Expansion