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An Expansionary Fiscal Policy

question 17

Multiple Choice

An expansionary fiscal policy
I. includes an increase in government spending.
II. includes tax cuts.
III. increases a government budget deficit or reduces a government budget surplus.


Definitions:

Time Value

The concept that money available in the present is worth more than the same amount in the future due to its potential earning capacity.

Market Value

The ongoing price for buying or selling a service or asset on the open market.

Equilibrium

Equilibrium refers to a state in which market supply and demand balance each other, and as a result, prices become stable.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specific price within a specified time frame.

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