An example of expansionary fiscal policy would be
A)a decrease in government spending to reduce budget deficits.
B)an increase in tax collection to reduce budget deficits.
C)a decrease in interest rates to help stimulate the economy.
D)an increase in government spending on infrastructure to create jobs and improve the economy.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or decreasing taxes in order to stimulate economic growth. Option D is an example of increasing government spending on infrastructure to create jobs and improve the economy, which is a form of expansionary fiscal policy. Options A and B describe contractionary fiscal policy, as they involve reducing government spending or increasing taxes to reduce budget deficits. Option C describes monetary policy, as it involves the Federal Reserve reducing interest rates to stimulate borrowing and spending by businesses and consumers.

An Example of Expansionary Fiscal Policy Would Be