Which of the following are characteristics of an expansionary fiscal policy?
I.Increased government spending on infrastructure projects.
II.Reduction in defense and education budgets.
III.Reduction in employment taxes.
IV.Reduction in government borrowing.
A)I and III only
B)II and III only
C)I, II and IV only
D)I, II, III and IV

Question

Quizplus · Accepted Answer

An expansionary fiscal policy involves increasing government spending and/or reducing taxes to stimulate economic growth. Therefore, choices I and III are both characteristics of an expansionary fiscal policy. Choice II, a reduction in defense and education budgets, would be a contractionary fiscal policy. Choice IV, a reduction in government borrowing, would not necessarily be a characteristic of an expansionary fiscal policy, as the government may need to borrow more in order to finance the increased spending or tax cuts.

Which of the Following Are Characteristics of an Expansionary Fiscal