Which of the following refers to government policies intended to increase spending and output?

Prepare for the CLEP Macroeconomics Exam with engaging quizzes, flashcards, and multiple-choice questions. Enhance your understanding with detailed hints and explanations. Excel in your exam!

The term that best describes government policies aimed at increasing spending and output is "expansionary policies." These policies are designed to stimulate economic growth, often during periods of economic downturn or recession. Expansionary policies typically include measures such as increasing government spending, lowering interest rates, and reducing taxes. By implementing these strategies, the government aims to increase overall demand in the economy, thereby encouraging businesses to invest and hire, ultimately leading to higher output and employment levels.

This concept is essential in macroeconomic theory as it reflects the active role that government can play in influencing economic performance. Expansionary policies are particularly effective in combating unemployment and deflation, as they work to inject liquidity into the economy and boost consumer confidence.

In contrast, contractionary policies would seek to decrease spending, stabilization policies may refer to efforts to maintain economic balance without necessarily increasing output, and expansive policies is not the standard terminology used to describe this economic approach. Therefore, "expansionary policies" is the precise term that captures the intention behind these government measures aimed at fostering economic growth.

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