A government might enact expansionary spending in order to increase aggregate demand for goods.
What is expansionary spending?
Expansionary spending is a form of expansionary fiscal policy. Expansionary spending is when the government of a country increases its spending with the aim of increasing the supply of money in the economy.
Another type of expansionary fiscal policy is reducing taxes. Reducing taxes increases disposable income. This increases the level of aggregate spending in the economy and money supply.
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