Expansionary fiscal policy should shift the
A) aggregate demand curve to the left.
B) aggregate demand curve to the right.
C) short-run aggregate supply curve to the left.
D) short-run aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or decreasing taxes, which will increase consumer and government spending, leading to an increase in aggregate demand. Therefore, the correct answer is B, as the aggregate demand curve will shift to the right.

Expansionary Fiscal Policy Should Shift the