Decrease in government spending
Expansionary Fiscal Policy Characteristics
Expansionary fiscal policy aims to stimulate economic activity by increasing aggregate demand. It is typically used during economic downturns or recessions.
Tools of Expansionary Fiscal Policy
Key measures include:
- Increased Government Spending: Direct injection of funds into the economy (e.g., infrastructure projects, social programs).
- Decreased Taxes: Reducing personal income taxes leaves consumers with more disposable income, potentially boosting consumption. Reducing business taxes can encourage investment and hiring.
Identifying Non-Expansionary Measures
The question asks for a characteristic that does NOT define expansionary fiscal policy. Let's analyze the options:
- Decrease in personal taxes: This increases disposable income, stimulating demand. It IS expansionary.
- Increase in government spending: This directly boosts aggregate demand. It IS expansionary.
- Decrease in government spending: This reduces aggregate demand and slows the economy. It is contractionary, NOT expansionary.
- Decrease in business taxes: This encourages business investment and potentially increases hiring and wages, stimulating demand. It IS expansionary.
Conclusion
A decrease in government spending runs counter to the goals of expansionary fiscal policy. Therefore, it is NOT characterized by this measure.
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When goods are produced by exploiting natural resources, it is an activity associated with:
A system in which local farmers were allowed to cultivate temporarily within a plantation is known as:
Which goods from India dominated the international textile markets before the age of mechanized industries?
Which type of farming is practiced in areas of high population pressure on land?
The major economic attribute for comparing countries is their:
