Expansionary fiscal policy is typically used to __________ aggregate demand in order to ____________.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy, such as increasing government spending and/or cutting taxes, is used to increase aggregate demand and boost economic activity, particularly during a recession when the economy is contracting. The objective is to stimulate consumer spending and business investment, leading to increased employment and economic growth. Therefore, option A is the correct answer as it states that expansionary fiscal policy is used to increase aggregate demand in order to escape a recession.

Expansionary Fiscal Policy Is Typically Used to __________ Aggregate Demand