In 2011, Faron's government maintained a balanced budget, but in 2012, expenditures exceeded revenues, resulting in a budget deficit. Based on this scenario, how would you classify the fiscal policy of Faron's government in 2012?

In 2011, Faron's government had a balanced budget, which means that the money it spent was equal to the money it earned. However, in 2012, the government spent more money than it received, leading to a budget deficit. This situation shows that the fiscal policy of Faron's government in 2012 was expansionary because it involved increased spending without enough revenue to cover those costs. For example, if Faron's government planned to build new schools but did not collect enough taxes to pay for them, it would have to borrow money, creating a deficit. Thus, the government's decision to spend more than it earned reflects a shift towards a fiscal policy that aims to stimulate the economy, even at the cost of running a deficit.