Which of the following will definitely result in fiscal stimulus?
A) Greater government spending and lower taxes
B) Greater government spending and higher taxes
C) Lower government spending and lower taxes
D) Lower government spending and higher taxes

Question

Quizplus · Accepted Answer

Fiscal stimulus refers to the government taking measures to increase the level of economic activity. One way to achieve that is through an increase in government spending, which could be targeted towards infrastructure projects or social welfare programs to directly boost economic activity. Another way is to reduce taxes, which would increase disposable income and potentially lead to increased spending. The combination of greater government spending and lower taxes (option A) would therefore result in fiscal stimulus.

Which of the Following Will Definitely Result in Fiscal Stimulus