Question

The goal of expansionary fiscal policy is

a. to decrease​ long-run aggregate supply.
b. to decrease​ short-run aggregate supply.
c. to increase aggregate demand.
d. All of the above.

Answer 1

c. to increase aggregate demand.

Step-by-step explanation:

Expansionary fiscal policy is carried out by governments to increase the citizens spending power and to revive the economy. This policy includes reduced tax rates, increased government spending. The results is that citizens have more money to spend thus leading to increased demands and subsequently increased production and supply. It is an important tool during recessions.