Respuesta :
A prime example of expansive fiscal policy is the (B) stimulus package.
What is expansionary fiscal policy?
- By giving consumers and businesses more money, an expansionary fiscal policy aims to boost economic activity. It's one of the main ways governments react to business cycle contractions and avoid economic recessions.
- If all else remains the same, a fiscal expansion will result in higher interest rates and "crowd out" some private investment, lowering the share of private investment in production.
- Fiscal policy also has an impact on the trade balance and the exchange rate in an open economy.
- The stimulus package is an illustration of expansive fiscal policy. When a central bank employs an expansionary monetary policy, it helps to boost the economy.
- This boosts the availability of money, brings down interest rates, and raises demand. It promotes economic expansion.
Therefore, a prime example of expansive fiscal policy is the (B) stimulus package.
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Correct question:
Which of the following is an example of expansionary fiscal policy?
a. increase in taxes
b. stimulus package
c. increasing the money supply d. lowering interest rates
