Question

Which of the following is an example of an expansionary fiscal policy?

A. All of the other selections
B. Decrease in income tax rates
C. Increase in fixed taxes
D. Decrease in government spending
E. Decrease in transfer payments

Answer 1

The correct answer is B)

Step-by-step explanation:

The correct answer is B) A decrease in taxes. This option is correct because a tax decrease is an example of an expansionary fiscal policy. As taxes decrease, the IS curve shifts rightward, which increases the aggregate demand curve. I hope I helped!