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One of the potential downsides of expansionary fiscal policy is that it often increases national debt....

One of the potential downsides of expansionary fiscal policy is that it often increases

national debt.

unemployment.

taxes.

budget surpluses.

business   economics   
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Answer #1

Potential downside of Expansionary fiscal policy is that if often increases National Debt.

Expansionary fiscal policy means that government spending or expenditure is higher than government revenue. To fulfil this government spending, it needs to borrow more money from the market which result in running a fiscal deficit duing expansionary fiscal policy. Thus higher borrowings put upward pressure in national debt of the country.

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