Alerts Wishlist Cart

What is the potential downside of expansionary fiscal policy?

Practice Questions

Q1
What is the potential downside of expansionary fiscal policy?
  1. Increased unemployment
  2. Higher inflation
  3. Decreased GDP
  4. Lower consumer spending

Questions & Step-by-Step Solutions

What is the potential downside of expansionary fiscal policy?
  • Step 1: Understand what expansionary fiscal policy is. It means the government is spending more money or cutting taxes to boost the economy.
  • Step 2: Recognize that when the government spends more, it can increase demand for goods and services.
  • Step 3: Realize that if demand increases too much, it can outpace the supply of goods and services available.
  • Step 4: Know that when demand is higher than supply, prices tend to rise, leading to inflation.
  • Step 5: Conclude that the potential downside of expansionary fiscal policy is higher inflation due to increased demand.
No concepts available.
Biology (School & UG)
Biology (School & UG)
Chemistry (School & UG)
Chemistry (School & UG)
Civil Engineering
Civil Engineering
Commerce & Accountancy
Commerce & Accountancy
Computer Science & IT
Computer Science & IT
Current Affairs & GK
Current Affairs & GK
Data Structures & Algorithms
Data Structures & Algorithms
eBooks
eBooks
Electrical & Electronics Engineering
Electrical & Electronics Engineering
English (School)
English (School)
General Aptitude
General Aptitude
General Knowledge
General Knowledge
General Knowledge & Current Affairs
General Knowledge & Current Affairs
Languages & Literature
Languages & Literature
Law & Legal Studies
Law & Legal Studies
Major Competitive Exams
Major Competitive Exams
Mathematics (School)
Mathematics (School)
Mechanical Engineering
Mechanical Engineering
Medical Science
Medical Science
Physics (School & Undergraduate)
Physics (School & Undergraduate)
Quantitative Aptitude & Reasoning
Quantitative Aptitude & Reasoning
Social Science (School)
Social Science (School)
Technical
Technical
Verbal and Reasoning
Verbal and Reasoning
Vocational & Skill Development
Vocational & Skill Development
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely