16
practice testMultiple Choice

Practice Test

Question 16 • Personal Finance and Economics

Expansionary spending takes place when a government makes the decision to

Answer
A
raise taxes to run a budget surplus.
B
raise taxes to balance its budget.
C
raise spending to stimulate the economy.
D
put a freeze on the number of its employees.

Explanation

Expansionary spending means the government increases its purchases or other spending to boost demand and encourage economic activity. Therefore, the correct choice is “raise spending to stimulate the economy.” Raising taxes or freezing the number of employees would not increase government spending.

AI-written and checked against the verified answer.

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