Question

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

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 increase consumer spending and increased 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.
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.

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.

Answer 1

[AI-generated answer — Bot GPT 3.5]

An expansionary fiscal policy is being used in this situation. This is because the government is increasing funding for infrastructure projects and Social Security benefits, which increases government spending. Additionally, the government is reducing individual income tax rates, which puts more money into the pockets of consumers and businesses, leading to increased spending and economic growth. Overall, the goal of this fiscal policy is to stimulate the economy by boosting both government and private sector spending.