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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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