Use the figure below to answer the following questions.

Figure 29.3.1
-Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. Discretionary expansionary fiscal policy would be shown as

Question

Use the figure below to answer the following questions.
  
Figure 29.3.1
-Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. Discretionary expansionary fiscal policy would be shown as

Quizplus · Accepted Answer

Discretionary expansionary fiscal policy involves increasing government spending and/or decreasing taxes in order to stimulate economic growth. This would be shown as an upward shift of the outlays curve, as government spending is increasing. A movement from left to right along the revenues curve would not be expansionary fiscal policy, as it would involve increasing taxes (which would have a contractionary effect on the economy). An upward shift of the revenues curve would indicate an increase in tax revenues, which could come from either an increase in tax rates or an increase in the tax base, but would not necessarily indicate expansionary fiscal policy.

Use the Figure Below to Answer the Following Questions