Question 21
[Maximum number: 1]
What is an example of expansionary fiscal policy?
A
an increase in income tax
B
an increase in private sector investment
C
an increase in spending on public goods
D
an increase in the money supply
CAIE A-Level Economics 5.2.6 Fiscal Policy Stance
Practise distinguishing expansionary and contractionary fiscal policy from tax and spending changes and tracing each stance to aggregate demand, inflation, income and budget…
How this is tested
- identify lower taxes or higher government spending as expansionary fiscal policy
- identify higher taxes or lower spending and a larger surplus as contractionary fiscal policy
- trace the chosen stance through disposable income and AD to output, prices and the budget balance