The federal government can use __________ in the form of __________to boost GDP. Select one: a. an expansionary fiscal policy; an increase in corporate taxes b. a contractionary fiscal policy; an increase in taxes c. an expansionary fiscal policy; an increase in government spending d. a contractionary fiscal policy; a reduction in taxes

The federal government can use __________ in the form of __________to boost GDP.
Select one:
a. an expansionary fiscal policy; an increase in corporate taxes
b. a contractionary fiscal policy; an increase in taxes
c. an expansionary fiscal policy; an increase in government spending
d. a contractionary fiscal policy; a reduction in taxes

Answer

• an expansionary fiscal policy; an increase in government spending
  Explanation:
  To boost an economy’s GDP, countries use expansionary fiscal policy which boosts aggregate demand, raising output and employment. Two fiscal policy tools that are used to increase output are reduction in taxes, and increase in government spending. Increased government spending reduces inequality, improves education and labor productivity, which encourages more aggregate demand and economic growth.