Question

State whether you agree or disagree with the following statements and
provide reasons: Because the crude oil price dropped to $20 per barrel in May 2020, fiscal policy
can be expansionary via bond financing.

Answer 1

I disagree with the following statement and this is because if the crude oil price decreased that can be a chance that the different decreased due to the lesser production in the firms and the usage as a result of which the country can be undergoing recession as a result of which contractionary fiscal policy should be used in order to tackle the reception where the tax rates are increased and government spending is decreased so that the government can get enough revenue to come out of recession on the whole and that is the reason why expansionary fiscal policy might not help in this case and therefore I disagree with this statement that crude oil price directly implies expansionary fiscal policy