Question

Suppose the government increases the amount of money it spends. This is an example of which of these?

using fiscal policy to decrease inflation
using fiscal policy to stimulate the economy
using monetary policy to stimulate the economy
using monetary policy to slow down the economy

Answer 1

A

Step-by-step explanation:

Answer 2

This is an example of using fiscal policy to stimulate the economy

Step-by-step explanation:

Use of fiscal policy or in this case fiscal deficit even, is a strategy some economies use so that the flow of the money remains the same even when the economy nears slow down.

The concept is that the country will be able to retrieve all the money back once the slowdown is over but if it gets worse then there is a little chance of getting more money .

So in long term the deficit actually is profitable.