Expansionary fiscal policy willHave no effect on the economySelect an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aIncrease consumption and incomebDecrease consumption and incomecHave no effect on the economydIncrease consumption and decrease income

Expansionary fiscal policy refers to the use of government spending and taxation policies to stimulate economic growth. In this case, we are considering the effect of expansionary fiscal policy on the economy.

To determine the effect, we need to analyze the options provided:

a) Increase consumption and income: Expansionary fiscal policy typically involves increasing government spending and/or reducing taxes. This can lead to an increase in disposable income for individuals and businesses, which in turn can stimulate consumption and overall economic activity. Therefore, this option suggests that expansionary fiscal policy will have a positive effect on the economy.

b) Decrease consumption and income: This option suggests that expansionary fiscal policy will have a negative effect on the economy by reducing consumption and income. However, this contradicts the purpose of expansionary fiscal policy, which is to stimulate economic growth.

c) Have no effect on the economy: This option suggests that expansionary fiscal policy will have no impact on the economy. However, this is not accurate as expansionary fiscal policy is specifically designed to have a positive effect on the economy.

d) Increase consumption and decrease income: This option suggests that expansionary fiscal policy will increase consumption but decrease income. However, this is unlikely as expansionary fiscal policy is generally aimed at boosting income and overall economic activity.

Based on the analysis, the correct answer is option a) Increase consumption and income. Expansionary fiscal policy is expected to stimulate economic growth by increasing consumption and income.