What would be the long-term implications of the government implementing expansionary fiscal policies indefinitely?(1 point)

Question

Responses

Higher individual and corporate tax rates and greater government spending limit growth of the private sector economy.
Higher individual and corporate tax rates and greater government spending limit growth of the private sector economy.

Individual and corporate tax rates decrease along with spending for social programs, both of which would lead the economy to slow down or contract.
Individual and corporate tax rates decrease along with spending for social programs, both of which would lead the economy to slow down or contract.

Decreases in federal government revenue and increasing expenses cause large deficits and add to the national debt, straining the economy.
Decreases in federal government revenue and increasing expenses cause large deficits and add to the national debt, straining the economy.

Increases to the corporate income tax rate lead to faster economic growth and drive inflation upwards.

Answer 1

The most accurate statement regarding the long-term implications of the government implementing expansionary fiscal policies indefinitely is:

Decreases in federal government revenue and increasing expenses cause large deficits and add to the national debt, straining the economy.

This response captures the essence of potential long-term effects of sustained expansionary fiscal policies, such as increased government spending without corresponding increases in revenue, leading to rising deficits and debt. Over time, this can put significant strain on the economy, potentially crowding out private investment, increasing borrowing costs, and creating challenges for future fiscal policy decisions.