📚 Learning Guide
Expansionary Fiscal and Monetary Policies
easy

What is the primary goal of expansionary fiscal policy?

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Learning Path
Learning Path

Question & Answer
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2
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3
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4
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Choose the Best Answer

A

Reduce inflation

B

Increase government spending

C

Decrease unemployment

D

Increase taxes

Understanding the Answer

Let's break down why this is correct

Answer

The primary goal of expansionary fiscal policy is to stimulate economic growth, especially during times of recession or slow economic activity. This is achieved by increasing government spending or cutting taxes, which puts more money into the hands of individuals and businesses. When people have more money, they tend to spend it, which boosts demand for goods and services. For example, if the government decides to build new schools and roads, this creates jobs and encourages workers to spend their earnings, helping the economy recover. Ultimately, the aim is to increase overall economic activity and reduce unemployment.

Detailed Explanation

The main aim of expansionary fiscal policy is to lower unemployment. Other options are incorrect because Some might think this policy is about reducing prices; While increasing spending is part of the policy, the main goal is to help people find jobs.

Key Concepts

Expansionary fiscal policy
Topic

Expansionary Fiscal and Monetary Policies

Difficulty

easy level question

Cognitive Level

understand

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