PRC-3 · Chapter 16 · Question 3 of 20
During a severe economic downturn, the Ministry of Finance decides to heavily slash income taxes and drastically increase government spending on public infrastructure. What is the name of this specific policy?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Expansionary Fiscal Policy
Explanation
Fiscal policy involves government taxation and spending. Slashing taxes and raising spending to boost aggregate demand and fight a recession is an 'expansionary' fiscal policy.
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