What is expansionary fiscal policy?

Increasing spending and cutting taxes to produce budget deficits means that the government is putting more money into the economy than it is taking out. Expansionary fiscal policy includes tax cuts, transfer payments, rebates and increased government spending on projects such as infrastructure improvements.

What are the two types of expansionary policy?

There are two types of expansionary policies – fiscal and monetary. Expansionary monetary policy focuses on increased money supply, while expansionary fiscal policy revolves around increased investment by the government into the economy. There are two main types of expansionary policy – fiscal policy and monetary policy.

What is expansionary policy?

Expansionary policy is also known as loose policy. Expansionary policy seeks to stimulate an economy by boosting demand through monetary and fiscal stimulus. Expansionary fiscal policy can include issuing stimulus checks or creating tax breaks, while expansionary policy can include lowering the federal funds rate.