Define expansionary fiscal policy.
Understand the Problem
The question is asking for a definition and explanation of expansionary fiscal policy, including its objectives and mechanisms.
Answer
Increasing government spending and reducing taxes to boost economic activity.
Expansionary fiscal policy involves increasing government expenditures and/or decreasing taxes to stimulate economic growth.
Answer for screen readers
Expansionary fiscal policy involves increasing government expenditures and/or decreasing taxes to stimulate economic growth.
More Information
It is typically used during periods of recession or economic slowdown.
Tips
Do not confuse it with expansionary monetary policy, which involves central bank actions to influence money supply.
Sources
- Fiscal Policy Definitions and Examples - investopedia.com
- Expansionary Fiscal Policy Explained - economicshelp.org
- Understanding the Role of Fiscal Policy - khanacademy.org
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