Final answer:
Expansionary fiscal policy aims to stimulate economic growth and reduce unemployment by increasing aggregate demand through lower taxes or increased government spending; option A, a decrease in unemployment rates, is the primary expected outcome.
Step-by-step explanation:
Expansionary fiscal policy involves either reducing taxes or increasing government spending to stimulate the economy. This policy is typically implemented during a recession when the economy is producing below its potential Gross Domestic Product (GDP) to combat unemployment and stimulate economic activity. When the government undertakes such measures, they increase the level of aggregate demand, which, other things being equal, will tend to decrease unemployment rates due to higher business activity leading to more job creation.
Moreover, expansionary fiscal policy could potentially increase net exports by stimulating domestic production, which can make a country's exports more competitive if the domestic currency does not appreciate significantly. However, it's essential to recognize that expansionary fiscal policy might not always lead to increased net exports if the domestic currency appreciates or if global demand is weak.
Consequently, the correct answer to the question is that Expansionary fiscal policy will tend to decrease unemployment rates. Hence, option A is correct, and option E could be correct in some contexts regarding net exports, but this is not universally true.