An example of expansionary fiscal policy could be
A) to increase taxes.
B) to reduce taxes.
C) to reduce government spending.
D) to reduce interest rates.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or reducing taxes to stimulate economic growth. Option B, reducing taxes, directly fits into this definition. Options A and C involve decreasing government involvement in the economy and would therefore not be expansionary. Option D, reducing interest rates, is an example of expansionary monetary policy, which is a separate tool from fiscal policy.

An Example of Expansionary Fiscal Policy Could Be