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Which of the following is a true statement?

a. fiscal policy swung from contractionary to expansionary in 2002.
b. fiscal policy has been expansionary every year since 2000.
c. fiscal policy has been contractionary every year since 2000.
d. fiscal policy swung from expansionary to contractionary in 2002.

User Mukul
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1 Answer

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Final answer:

Fiscal policy likely shifted from contractionary to expansionary around 2002 (option a) in response to the economic downturn, in line with the preference for expansionary measures during recessions to stimulate growth.

Step-by-step explanation:

The correct statement regarding the fiscal policy in 2002 is not provided directly in the information given. However, analysis of historical economic context suggests that fiscal policy did swing from contractionary to expansionary around that time. Specifically, the early 2000s were characterized by economic downturns, including the recession that occurred after the dot-com bubble burst and the economic impacts following the September 11 attacks in 2001. Politicians often prefer expansionary fiscal policies during recessions, which involve increasing government spending and/or decreasing taxes to stimulate economic growth.


Given that the United States experienced a recession in the early 2000s, it would be likely that fiscal policy became more expansionary to counteract the economic slowdown. Expansionary fiscal policy is typically implemented to end recessions, and although exact dates of policy changes are subject to historical records, the general trend would imply an expansionary shift. It's important to remember, however, that there can be a lag in implementing and realizing the effects of such policies, and politicians may struggle to deliver immediate results.

User Marcospereira
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