What should be a future effect upon the economy if a expansionary fiscal policy continues?
Elijah King 
If expansionary fiscal policy continues in an economy with an increasing budget deficit and a growing national debt, such an economy will experience high inflation. Expansionary fiscal policy means an increase in government spending.
What is the effect of an expansionary fiscal policy upon an economy with an increasing budget deficit and growing national debt *?
unit 5 econ
| Question | Answer |
|---|---|
| which pairs of operations BEST fit with fiscal policy? | government spending and taxation |
| what is the effect of an expansionary fiscal policy upon an economy with an increasing budget deficit and growing national debt? | increased deficit spending and increasing or growing national debt |
How does expansionary fiscal policy affect the economy?
Expansionary fiscal policy is used to kick-start the economy during a recession. It boosts aggregate demand, which in turn increases output and employment in the economy. In pursuing expansionary policy, the government increases spending, reduces taxes, or does a combination of the two.
What would happen in the bond market if the government imposes expansionary fiscal policy by increasing spending while maintaining existing tax revenues?
Because an expansionary fiscal policy either increases government spending or reduces revenues, it increases the government budget deficit or reduces the surplus. In either case, fiscal policy thus affects the bond market.
Which fiscal policy would be most appropriate to reduce inflation?
The goal of contractionary fiscal policy is to reduce inflation. Therefore the tools would be an decrease in government spending and/or an increase in taxes. This would shift the AD curve to the left decreasing inflation, but it may also cause some unemployment.
Which is a consequence of an expansionary fiscal policy?
HIGH INFLATION is a consequence of expansionary fiscal policy with increased deficit spending and growing national debt. A contractionary fiscal policy should be put into action to reign in the money supply. With regards to economic growth, what is the goal of an expansionary fiscal policy?
How does an increase in the fiscal deficit affect the economy?
An increase in the fiscal deficit, in theory, can boost a sluggish economy by giving more money to people who can then buy and invest more. Long-term deficits, however, can be detrimental for …
How does fiscal policy help to stabilize output?
For instance, if output suddenly contracts, policymakers can let tax revenues fall along with income (or even deliberately cut tax rates) and let unemployment benefits increase with the number of unemployed. This maintains income and purchasing power for individuals, and supports demand.
What is the goal of a contractionary fiscal policy?
A contractionary fiscal policy should be put into action to reign in the money supply. With regards to economic growth, what is the goal of an expansionary fiscal policy? The goal of an expansionary fiscal policy is to INCREASE ECONOMIC GROWTH. The government uses fiscal policy to either slow or grow the economy.
