The expansionary fiscal policy by the government leads to __:
1. Increased money supply
2. Increase government spending
3. Increased tax revenue
Select the correct option from the codes given below:

Answer: [A] Only 1 & 2

A macroeconomic policy that seeks to expand the money supply to encourage economic growth or combat inflation (price increases). One form of expansionary policy is fiscal policy, which comes in the form of tax cuts, rebates and increased government spending. Expansionary policies can also come from central banks, which focus on increasing the money supply in the economy.

This question is a part of GKToday's Integrated IAS General Studies Module