Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The government increases infrastructure spending to boost job creation during a recession.
B
The central bank raises interest rates to control inflation.
C
The government implements tax increases to reduce the budget deficit.
D
The central bank sells government bonds to decrease the money supply.
Understanding the Answer
Let's break down why this is correct
Answer
Expansionary fiscal policy is when the government increases spending or cuts taxes to stimulate the economy. For example, if a country is facing a recession, the government might decide to build new roads and schools, creating jobs and increasing demand for materials. This extra spending helps businesses grow and encourages people to spend more money, which can lead to a stronger economy. A concrete example is during a downturn, if the government invests in infrastructure projects, this not only provides immediate jobs but also improves the economy in the long run by enhancing transportation and services. Overall, the goal of expansionary fiscal policy is to boost economic activity and reduce unemployment.
Detailed Explanation
When the government spends more money on things like roads and bridges, it creates jobs. Other options are incorrect because Raising interest rates makes borrowing money more expensive; Increasing taxes takes money out of people's pockets.
Key Concepts
Expansionary Fiscal Policy
Aggregate Demand
Economic Stimulus
Topic
Expansionary Fiscal and Monetary Policies
Difficulty
easy level question
Cognitive Level
understand
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