A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Question

Quizplus · Accepted Answer

To stimulate the economy, the government would increase spending on infrastructure projects, education, and other programs to increase demand for goods and services. This would create jobs and raise overall economic activity. Option A is faulty as it would only discourage spending and investment which would hamper economic growth. Option B is used by the monetary authorities to control inflation. Option C, lower interest rates can be used to encourage borrowing and increase spending, but it is not part of fiscal policy.

A Government Using Fiscal Policy in an Attempt to Stimulate