Chapter 30, Problem 2MCQ

To determine

The correct option regarding the impact of expansionary fiscal policy.

Explanation of Solution

The goal of an expansionary fiscal policy is to increase economic growth to a steady range, which is necessary throughout a business cycle's contractionary stage. The objectives of the administration are to lower unemployment, boost consumer demand, and avert a recession.   If a recession has already started, it aims to put an ending to it while averting a depression.

To put it another way, expansionary fiscal policy is when the government uses budgetary mechanisms to raise spending or reduce taxes, both of which give people and companies more money to spend.

Thus, from the above we can conclude that the correct option is D.