Why Would a Government Want to Use Expansionary Fiscal Policy

question 100

Multiple Choice

Why would a government want to use expansionary fiscal policy to help stimulate aggregate demand if,in the long run,we would expect prices to adjust and the economy to return to its long-run equilibrium on its own?

• A) Expansionary fiscal policy always works in stimulating aggregate demand.
• B) It could take a long time for prices to adjust by market forces alone.
• C) Expansionary fiscal policy has no adverse effects on the economy.
• D) When prices adjust during a recession,we see increases in inflation.
• E) Expansionary fiscal policy is easy to get approved by Congress and the president.

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Definitions:

In-group Dynamics

The interactions and relationships within a closely connected group, influencing members' behavior and attitudes.

Out-group Dynamics

Refers to the social and psychological phenomena associated with individuals or groups perceiving themselves as distinct or separate from another group, often leading to prejudice or rivalry.

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Educational institutions providing secondary education to adolescents, typically offering grades 9 through 12.

Functionalist

A perspective in sociology and anthropology that interprets society as a structure with interrelated parts designed to meet the biological and social needs of individuals that make up that society.