How do the instances when expansionary fiscal policy should be used compare with those for contractionary fiscal policy?(1 point)

Question

Responses

Expansionary fiscal policy should be used to increase the unemployment rate and contractionary fiscal policy should be used when economic growth is too fast.
Expansionary fiscal policy should be used to increase the unemployment rate and contractionary fiscal policy should be used when economic growth is too fast.

Expansionary fiscal policy should be used to combat high inflation and contractionary fiscal policy should be used to increase government revenue.
Expansionary fiscal policy should be used to combat high inflation and contractionary fiscal policy should be used to increase government revenue.

Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation.
Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation.

Expansionary fiscal policy should be used to increase government revenue and contractionary fiscal policy should be used to increase consumer spending.

Answer 1

The most accurate response is:

Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation.

Expansionary fiscal policy aims to stimulate the economy during periods of recession or economic slowdown by increasing government spending and/or decreasing taxes, thereby boosting aggregate demand and reducing unemployment. In contrast, contractionary fiscal policy is employed to cool down an overheating economy characterized by high inflation, by decreasing government spending and/or increasing taxes to curb aggregate demand.