Which of the following represents the use of fiscal policy to achieve a fiscal stimulus?
A)Greater government expenditure or lower taxes.
B)Greater government expenditure or higher taxes.
C)Lower government expenditure or lower taxes.
D)Lower government expenditure or higher taxes.

Question

Quizplus · Accepted Answer

To achieve a fiscal stimulus, the government needs to increase aggregate demand by either increasing government expenditure or reducing taxes. Choice A represents both options, whereas the other choices represent either reducing government expenditure or increasing taxes, which would have the opposite effect of a fiscal stimulus.

Which of the Following Represents the Use of Fiscal Policy