Econia has an evenly balanced budget. Then its government chooses to use an expansionary fiscal policy to combat a recession. What impact would this policy have on Econia's budget balance?

Question

Quizplus · Accepted Answer

Expansionary fiscal policy, typically involving increased government spending and/or tax cuts, would lead to higher government expenditures than revenues, thus creating a budget deficit.

Econia Has an Evenly Balanced Budget