Which of the following is a likely result of expansionary fiscal policy?

Expansionary fiscal policy is designed to stimulate economic growth, particularly during a downturn or recession. This policy typically involves increasing government spending, reducing taxes, or both. The primary aim is to boost aggregate demand, which is the total demand for goods and services in an economy.

When the government increases its spending, it directly injects money into the economy. This spending can take various forms, such as investments in infrastructure, increased funding for public services, or grants to businesses and households. This infusion of cash tends to stimulate consumer spending and business investment, as individuals and firms feel more confident to spend and invest when they see government activity and support in the economy.

As a result, the overall demand for goods and services increases, which is what is meant by an increase in aggregate demand. This heightened demand can lead to higher output and potentially lower unemployment, as businesses respond to the greater demand for their products and services.

In contrast, decreased public spending, lower interest rates, and higher taxes may not effectively promote economic growth in the same way. Reduced spending would likely have the opposite effect, contracting aggregate demand. Lower interest rates could occur as a result of expansionary monetary policy, but they are not a direct outcome of fiscal policy. Higher taxes would also reduce