ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Expansionary fiscal policy is intended to boost growth to a healthy economic level, which is required during the business cycle’s contractionary period. The government seeks to reduce unemployment, raise consumer demand, and stop the recession.

Detailed explanation-2: -Expansionary policies increase the availability of funds, which, in turn, leads to increased consumption and greater economic growth. Because companies have more funds available to them, they increase production, which then increases the demand for all factors of production, including human capital.

Detailed explanation-3: -Expansionary policy is intended to boost business investment and consumer spending by injecting money into the economy either through direct government deficit spending or increased lending to businesses and consumers.

Detailed explanation-4: -The expansionary monetary policy is successful because people and corporations get better returns by spending their money on equipment, new homes, assets, cars, investing in businesses, and other expenditures that help move the money throughout the system, thus increasing economic activity.