Answer to Question #8988 in Macroeconomics for moni

Question

Which of the following would not be an expansionary fiscal policy?

Increased welfare payments to the poor
Decreases in federal taxes on corporations
A balanced budget
Increased government expenditures on goods and services

Answer 1

A balanced budget

Expansionary fiscal policy is a stimulating policy. The main instruments of this policy are:
- Decrease taxes
- Increase government expenditures

Increased welfare payments to the poor, Decreases in federal taxes on corporations, increased government expenditures on goods and services all these step is a instruments of stimulating fiscal policy, so a balanced budget is not instrument of expansionary fiscal policy