Use the following to answer questions:
-Which factor is an expansionary fiscal policy?
A) an increase in the money supply that decreases interest rates
B) an increase in taxes that reduces the budget deficit and decreases consumption
C) a decrease in government spending
D) an increase in employment insurance benefits

Question

Use the following to answer questions: 
-Which factor is an expansionary fiscal policy?
A) an increase in the money supply that decreases interest rates 
B) an increase in taxes that reduces the budget deficit and decreases consumption 
C) a decrease in government spending 
D) an increase in employment insurance benefits

Quizplus · Accepted Answer

An increase in employment insurance benefits is an expansionary fiscal policy because it puts more money in the hands of consumers, which can increase consumption and stimulate economic growth. Option A is a monetary policy, not fiscal policy. Option B is a contractionary fiscal policy because it decreases overall spending in the economy. Option C is also a contractionary fiscal policy because it decreases government spending.

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