The federal government recently increased funding for infrastructure projects and Social Security benefits while reducing individual income tax rates. Explain the fiscal policy being used in this situation.(1 point)
Responses
A contractionary fiscal policy is being used because the decrease in tax rates decrease consumer spending and increased government spending slows down economic growth and inflation.
An expansionary fiscal policy is being used because the decrease in tax rates increase consumer spending and increased government spending helps stimulate the economy.
An expansionary fiscal policy is being used because the decrease in tax rates decrease consumer and business spending and increase in government spending helps stimulate the economy.
A contractionary fiscal policy is being used because a decrease in tax rates decrease consumer spending and increased government spending slows down economic growth and inflation