A. decrease in the corporate profit tax rates
B. decrease in welfare payments
C. purchase of government securities
D. decrease in the bank rate
Correct Answer:
Option A – decrease in the corporate profit tax rates
Explanation
Expansionary fiscal policy is when the government expands the money supply in the economy using budgetary tools to either increase spending or cut taxes—both of which provide consumers and businesses with more money to spend. Cutting down on tax rates would mean higher profits for businesses. This is done to increase the supply of money in the economy.
