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A form of fiscal policy in which an increase in government purchases, a decrease in taxes, and/or an increase in transfer payments are used to correct the problems of a businesscycle contraction. The goal of expansionary fiscal policy is to close a recessionary gap, stimulate the economy, and decrease the unemployment rate. Expansionary fiscal policy is often supported by expansionary monetary policy. An alternative is contractionary fiscal policy. Expansionary fiscal policy is designed to stimulate the economy during or anticipation of a business-cycle contraction. This is accomplished by increasing aggregate expenditures and aggregate demand through an increase in government spending (both government purchases and transfer payments) or a decrease in taxes. Expansionary fiscal policy leads to a larger government budget deficit or a smaller budget surplus.
J. Hill has the following assets and liabilities as on November 30, 2009: Accounts Payable $2800, Equipment $6200, Car$7300, Inventory $8100, Accounts Receivable $4050, Cash at bank $ 9100, Cash in hand $195 You are not given the Capital amount at that5 date During the first week of December 2009 a) Hill brought extra equipment on credit for $110 b) Hill bought extra inventory by cheque $380 c) Hill paid creditors by cheque $1150 d) Debtors paid hill $640 by cheque and $90by cash e) Hill put an extra $1500 into the business $1300 by cheque and $200 in cash Required: You are to draw up a balance sheet on December 7, 2009 after the above transactions have been completed