ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to encourage GDP growth & prevent a recession
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to expand the govt’s control over non-defense spending
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to control demand fro consumer goods & services
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to slow down the economy so demand doesn’t exceed supply
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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: -The purpose of expansionary fiscal policy is to boost growth to a healthy economic level, which is needed during the contractionary phase of the business cycle. The government wants to reduce unemployment, increase consumer demand, and avoid a recession.
Detailed explanation-3: -Why does the government sometimes use an expansionary fiscal policy? To encourage growth and try to stop or prevent a recession. Why is it difficult for federal government to increase/decrease our spending? Two-thirds of all government spending is on entitlements, which government can not easily alter.
Detailed explanation-4: -Expansionary Fiscal Policy – AD/AS Impact of expansionary fiscal policy – increases AD and leads to higher real GDP and inflation.
Detailed explanation-5: -During expansionary periods, governments can increase spending on infrastructure projects, social programs, and other initiatives to boost demand and stimulate economic growth. They may also enact tax cuts to reduce taxes, which puts more money in consumers’ pockets and stimulates spending.