Answer: Expansionary fiscal policy is a type of economic policy that involves increasing government spending or decreasing taxes to stimulate economic growth and help a nation recover from a recession.
Step-by-step explanation:
Expansionary fiscal policy is a type of economic policy that involves increasing government spending or decreasing taxes to stimulate economic growth and help a nation recover from a recession.
There are several ways in which expansionary fiscal policy can help a country recover from a recession:
- Increased government spending: By increasing government spending on infrastructure projects, research and development, and social programs, the government can create new jobs and stimulate demand for goods and services. This can help to boost economic activity and bring the economy out of recession. Decreased taxes:
- Decreasing taxes can put more money in consumers' pockets, leading to increased spending on goods and services. This increased demand can help to stimulate economic growth and bring the economy out of recession.
- Increased confidence: Expansionary fiscal policy can also help increase consumer and business confidence, encouraging people to spend more money and invest in the economy.
It's important to note that while expansionary fiscal policy can be effective at helping to stimulate economic growth and recovery from a recession, it can also have negative consequences, such as increasing the national debt or leading to inflation. Therefore, it's essential for governments to carefully consider the potential costs and benefits of the expansionary fiscal policy before implementing it.