Asked by Katie Lucas on May 05, 2024
Verified
Expansionary fiscal policy involves
A) a decrease in government spending and/or an increase in taxes.
B) only an increase in taxes.
C) an increase in government spending and/or a decrease in taxes.
D) only a decrease in government spending.
Expansionary Fiscal Policy
To fight recessions, the federal government lowers taxes and/or raises spending.
Government Spending
Expenditures made by the government of a country on collective needs and wants such as infrastructure, public safety, education, and healthcare.
- Comprehend the functions of taxes and governmental expenditures in the realm of fiscal policy.
Verified Answer
PA
Proficient AccountantsMay 07, 2024
Final Answer :
C
Explanation :
Expansionary fiscal policy refers to increasing government spending and/or decreasing taxes in order to stimulate economic growth and increase aggregate demand. Option C is the only one that includes an increase in government spending and a decrease in taxes, both of which are associated with expansionary fiscal policy. The other options involve either a decrease in government spending (option D) or an increase in taxes (option B), which are contractionary fiscal policies.
Learning Objectives
- Comprehend the functions of taxes and governmental expenditures in the realm of fiscal policy.