Question

With regards to economic growth, what is the goal of an expansionary fiscal policy? A) to increase trade deficits B) to increase economic growth Eliminate C) to decrease economic growth D) to maintain current economic levels

Answer 1

The correct answer is B: To increase economic growth

With regards to economic growth, the goal of expansionary fiscal policy is to increase economic growth by the government expanding its money supply to the economy.  It is achieved when the government seeks to increase aggregate demand through high government spending and lower tax levels. The purpose of expansionary fiscal policy is to boost the growth of a healthy economic level. The government usually wants to reduce unemployment, increase consumer demand, and avoid a recession.