Final answer:
Expansionary fiscal policy is used to increase aggregate demand and stimulate economic growth in a recession by increasing government spending or reducing tax rates.
Step-by-step explanation:
An expansionary fiscal policy is used to increase the level of aggregate demand in the economy by either increasing government spending or reducing tax rates. This policy aims to stimulate economic growth and decrease unemployment when an economy is in recession and producing below its potential GDP. It can be achieved by increasing consumption through cuts in personal income taxes or payroll taxes, increasing investment spending by cutting business taxes, and increasing government purchases through increased federal government spending on final goods and services.