The government is pursuing an expansionary fiscal policy if it
A) decreases government spending and increases taxes.
B) increases government spending or increases taxes.
C) decreases government spending or reduces taxes.
D) increases government spending and/or reduces taxes.

Question

Quizplus · Accepted Answer

An expansionary fiscal policy involves increasing government spending and/or reducing taxes in order to stimulate economic growth and increase aggregate demand. Option D is the only choice that includes these actions as possibilities.

The Government Is Pursuing an Expansionary Fiscal Policy If It