Amid an economic recession, a government decides to implement an expansionary fiscal policy. This policy includes increasing government spending on infrastructure projects and reducing taxes to stimulate demand and create jobs. While the policy aims to boost economic activity, it also risks increasing the national debt and potentially leading to higher inflation. In this scenario, the primary objective of the expansionary fiscal policy is to: A) Reduce government spending and increase taxes B) Stimulate economic activity and job creation C) Focus solely on long-term economic growth D) Increase the national debt and inflation
Amid an economic recession, a government decides to implement an expansionary fiscal policy. This policy includes increasing government spending on infrastructure projects and reducing taxes to stimulate demand and create jobs. While the policy aims to boost economic activity, it also risks increasing the national debt and potentially leading to higher inflation. In this scenario, the primary objective of the expansionary fiscal policy is to: A) Reduce government spending and increase taxes B) Stimulate economic activity and job creation C) Focus solely on long-term economic growth D) Increase the national debt and inflation
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 1SQ
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Amid an economic recession, a government decides to implement an expansionary fiscal policy. This policy includes increasing government spending on infrastructure projects and reducing taxes to stimulate demand and create jobs. While the policy aims to boost economic activity, it also risks increasing the national debt and potentially leading to higher inflation. In this scenario, the primary objective of the expansionary fiscal policy is to:
A) Reduce government spending and increase taxes
B) Stimulate economic activity and job creation C) Focus solely on long-term
D) Increase the national debt and inflation
Explain all options pls
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