Which of the Following Policy Options Would Both Be Expansionary

question 58

Multiple Choice

Which of the following policy options would both be expansionary fiscal policy?

• A) Increase taxes, and increase government purchases.
• B) Increase taxes, and decrease government purchases.
• C) Decrease taxes, and increase government purchases.
• D) Decrease taxes, and decrease government purchases.

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Definitions:

Gasoline Tax

A levy imposed by governments on the sale of gasoline, often used to fund transportation infrastructure and environmental initiatives.

Corporate Income Tax

A tax on the profit of a corporation, where the tax rates can vary based on a country's tax laws and the company's income levels.

Regressive Tax

A tax levied in a way where the rate of taxation diminishes as the taxable amount gets larger.

Proportional Tax

A taxation system where the tax rate remains constant regardless of the amount subject to tax.