🎓 IB Exam Prep

What is the primary goal of expansionary fiscal policy?

A To reduce the national debt.
B To decrease aggregate demand and slow inflation.
C To stimulate economic growth and reduce unemployment.
D To increase interest rates and attract foreign investment.

✓ Correct Answer: Option C

Expansionary fiscal policy involves increasing government spending and/or decreasing taxes to boost aggregate demand, encourage investment, and ultimately stimulate economic growth and reduce unemployment during a recession or period of slow growth.

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