IDNLearn.com is committed to providing high-quality answers to your questions. Ask anything and receive comprehensive, well-informed responses from our dedicated team of experts.
Answer:
reduced economic activity and increased government borrowing
Explanation:
Expansionary fiscal policy increases the level of aggregate demand, through either increases in government spending or reductions in tax rates. Expansionary policy can do this by (1) increasing consumption by raising disposable income through cuts in personal income taxes or payroll taxes; (2) increasing investment spending by raising after-tax profits through cuts in business taxes; and (3) increasing government purchases through increased federal government spending on final goods and services and raising federal grants to state and local governments to increase their expenditures on final goods and services.