An example of expansionary fiscal policy could be
A) to increase the nation's money supply.
B) to reduce tax rates.
C) to reduce government spending.
D) to reduce interest rates.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government expenditures or decreasing taxes, which in turn stimulates economic growth. Option B, reducing tax rates, fits this definition and leads to increased consumer spending and investment, both of which can have a positive effect on the economy. Options A, C, and D are not expansionary fiscal policies as they do not involve increasing government expenditures or decreasing taxes.

An Example of Expansionary Fiscal Policy Could Be