📚 Learning Guide
Expansionary Fiscal and Monetary Policies
easy

Which of the following is a primary objective of implementing tax cuts as part of expansionary fiscal policy?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

Increase government revenue

B

Stimulate economic growth

C

Reduce inflation

D

Decrease national debt

Understanding the Answer

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Answer

A primary objective of implementing tax cuts as part of expansionary fiscal policy is to stimulate economic growth. When the government reduces taxes, people have more money to spend. This extra money can lead to increased consumer spending, which helps businesses grow and can create new jobs. For example, if a family receives a tax cut, they might decide to buy a new car or go on vacation, which then supports car dealerships and travel agencies. Overall, the goal is to boost economic activity and help the economy recover during a downturn.

Detailed Explanation

Tax cuts put more money in people's pockets. Other options are incorrect because Some think tax cuts increase government money; People might believe tax cuts lower prices.

Key Concepts

Tax cuts
Topic

Expansionary Fiscal and Monetary Policies

Difficulty

easy level question

Cognitive Level

understand

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