Question

Expansionary fiscal policy refers to_______, while contractionary fiscal policy refers to_______.

[1] an increase in government borrowing; decrease in government spending.

[2] decrease in taxes; increase in government spending.

[3] an increase in government spending; an increase in taxes.

[4] demand management policy; monetary policy.

Answer 1

Expansionary fiscal policy refers to decrease in taxes; Expansionary fiscal policy refers to increase in government spending.