Question

. An expansionary fiscal policy can be illustrated by a:

Answer 1

An expansionary fiscal policy can be illustrated by a decrease in
taxes or an increase in government spending.
Both policy measures result in an increase in aggregate demand that leads to economic expansion.
Gross Domestic Product (GDP) = C(Consumption) + G (Government spending) + I (Investment) + X (net exports)
A decrease in taxes results in more consumption and more investment. More consumption
and more investment leads to a higher GDP.
An increase in government spending leads to an increase in overall GDP.