📚 Learning Guide
Expansionary Policy and Investment
easy

What is the primary goal of an expansionary fiscal policy?

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Choose the Best Answer

A

To reduce unemployment

B

To increase taxes

C

To decrease government spending

D

To balance the budget

Understanding the Answer

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Answer

The primary goal of an expansionary fiscal policy is to stimulate economic growth, especially during times of recession or slow economic activity. This type of policy involves the government increasing its spending or cutting taxes to encourage more money to flow into the economy. For example, if the government decides to build new schools or roads, it creates jobs and allows workers to spend more money, which helps businesses thrive. By boosting demand for goods and services, expansionary fiscal policy aims to reduce unemployment and increase overall economic activity. In essence, it is about using government actions to make the economy stronger and help people find work.

Detailed Explanation

The main aim of expansionary fiscal policy is to lower unemployment. Other options are incorrect because Some might think that increasing taxes helps the economy; It's a common belief that cutting government spending is helpful.

Key Concepts

fiscal policy
Topic

Expansionary Policy and Investment

Difficulty

easy level question

Cognitive Level

understand

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