Question

According to the graph, how do expansionary fiscal policies affect the economy? a. The government decreases spending to save more money. b. The government increases spending to raise output of goods and services and create jobs in the short term. c. The government decreases demand to reduce the growth of economic output. d. The government increases supplies to increase inflation and raise prices.

Answer 1

Based on the graph, the expansionary fiscal policies affect the economy by letter B; the government increases spending to raise output of goods and services and create jobs in the short term. Expansionary fiscal policies are considered useful strategy amidst recession. The raise in the demands of goods and services may result to the increase of production thus, generate more jobs to people. Since people are now employed, then, more people will spend for the goods and service, and the cycle continues.