3 years ago

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

Business

1 answer:

Artemon [7]3 years ago

6 0

Answer:

The correct answer is option D.

Explanation:

Expansionary fiscal policy is used to boost economic activities. It is used in case of a recession in the economy. The main tools of expansionary fiscal policy are an increase in government spending and a decrease in taxes.

Both of these will cause an increase in disposable income. This will further lead to an increase in the aggregate demand, causing a rightward shift in the aggregate demand curve.

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