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.

💡 Why is C) the correct answer?

The correct answer to the question "What is the primary goal of expansionary fiscal policy?" is Option C: To stimulate economic growth and reduce unemployment..

The other options — A) To reduce the national debt., B) To decrease aggregate demand and slow inflation., D) To increase interest rates and attract foreign investment. — are incorrect for this IB Exam Prep question. As explained above: Expansionary fiscal policy involves increasing government spending and/or decreasing taxes to boost aggregate demand, encourage investment, and ultimately stimulate economic growth and reduce unemplo…

📚 About This IB Exam Prep Practice Question

This 3-level IB Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free IB Exam Prep practice test or use flashcards for spaced repetition review.

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What is the primary goal of expansionary fiscal policy?

✓ Correct Answer: Option C

📚 About This IB Exam Prep Practice Question

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